Magazine article HRMagazine

New Whistle-Blower Worries

Magazine article HRMagazine

New Whistle-Blower Worries

Article excerpt

The U.S. Securities and Exchange Commission (SEC) recently awarded $30 million to a foreign whistle-blower, the high- est whistle-blower award to date and more than double the amount of any previous award. While that has attracted plenty of attention, a smaller, $300,000 award may prove even more worrisome for companies.

For the first time, the SEC issued an award to someone who is paid by his or her own company to root out misconduct. The whistle-blower performed internal audit and compliance work.

"Employers should be concerned because people with inter- nal and compliance functions do not work for the SEC. They work for the company," says attorney Lou R. Mejia, a partner with Perkins Coie LLP in Washington, D.C., who represents public companies and others before the SEC. "Part of their responsibility is to help the company resolve issues when they are raised."

The SEC action may drive a wedge between management and employees with compliance functions, Mejia argues. He worries that, instead of exploring issues in more detail or trying to understand the company's position, employees responsible for internal audits and compliance "will simply go to the SEC because that's where they can get a big payday. …

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