Whistleblowers Should Comply With Reporting Programs First

The Securities and Exchange Commission whistleblower program, which provides awards to certain whistleblowers who report securities laws violations to the SEC, encourages would-be whistleblowers to comply with internal reporting programs first. 

The SEC’s whistleblower rules do this in at least two ways. First, the SEC weighs the whistleblower’s participation in the firm’s internal compliance program as a factor that may increase the whistleblower’s eventual award. And the SEC considers interference with internal compliance programs to be a factor that may decrease any award. Second, the SEC’s whistleblower rules give the would-be whistleblower the benefit of the earlier date on which the internal compliance report was made, so long as the whistleblower makes his or her SEC filing within 120 days. In that situation, the SEC form requests a copy of the internal reporting. In these ways, the SEC encourages compliance with companies’ internal compliance programs, without sacrificing whistleblower reporting to the SEC.

Learn more about our Whistleblower Practice

John Sinatra is a partner in the Business Litigation
Practice at Hodgson Russ LLP. You can reach him at jsinatra@hodgsonruss.com.

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