In an article published by the New York Times yesterday, Lloyd Chinn, Co-head of Proskauer’s Whistleblower & Retaliation Group, commented on the recent efforts of some companies to strengthen their whistleblower compliance programs internally so that employees will report alleged fraud to the company before informing the Securities Exchange Commission (SEC).
According to Chinn, “There is a sharper focus to encourage employees to keep their complaints at home through positive steps, rather than punitive measures.” Such steps include more companies requiring employees to attest annually to not having witnessed fraud.
Lloyd’s observation comes at a time when the SEC whistleblower program is receiving an increasing number of “tips” from whistleblowers who can reap a sizeable portion of the money the SEC collects when fining a company for violating the law. Accordingly, employers must continue to take the necessary measures to reinforce their internal compliance mechanisms to avoid costly and disruptive litigation. Our Top 10 Ways To Minimize Whistleblower Risks is a great place to start.