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Whistleblower Developments

Some whistleblower developments on both sides of the Atlantic to pass along.


The U.K. Serious Fraud Office recently issued this release to launch “SFO Confidential” – a live on-line resource “for concerned individuals to help expose situations that might deserve a closer look.”  Richard Alderman, Director of the SFO, stated as follows.  “I want people to come forward and tell us if they think there is fraud or corruption going on in their workplace. Company executives, staff, professional advisors, business associates of various kinds or trade competitors can talk to us in confidence. I have set up a special team to make the SFO readily accessible to whistleblowers, with trained staff sympathetic in dealing with any anxieties people might have about coming forward.  I want whistleblowers to feel comfortable about it and use SFO Confidential to help flush out fraud.”

As Bryan Cave attorneys note in this alert, unlike the recently enacted Dodd-Frank Act whistleblower provisions that provide monetary incentives to whistleblowers, “SFO Confidential appeals instead to the individual’s civic duty and/or self interest in preventing fraud and corruption (for example, promising to “level the commercial playingfield” where a competitor is gaining business unfairly through fraud or corruption).”

Perhaps sensing a marketing opportunity, Field Fisher & Waterhouse (here) stated as follows.  “The SFO’s implementation of a whistleblowing hotline may worry companies who have experienced corruption issues in the past. The hotline clearly increases the risk of issues being highlighted anonymously by disgruntled employees or competitors. The introduction of the hotline comes 4 months after the date that the Bribery Act 2010 came into force. Under this Act, commercial organisations can be held liable for bribes paid by those acting on their behalf, even if the bribe is paid outside the UK. A business which implements “adequate procedures” to prevent bribery has a complete defence to this kind of charge under the Act.   The hotline also comes at a time of increased enforcement by the Serious Fraud Office. During the course of last week the SFO announced two new prosecutions for corruption.”


Martin Weinstein and Robert Meyer (Willkie Farr & Gallagher) report here on the recently introduced Whistleblower Improvement Act of 2011 (“H.R. 2483”) (see here).   Among other changes the legislation would make to the recently enacted Dodd-Frank whistleblower provisions are the following according to Weinstein and Meyer:  “It would revise the award eligibility standards to require whistleblowers who are reporting their employer’s possible violations of federal securities laws to internally report such misconduct prior to reporting to the SEC;” “It would render the whistleblower award discretionary as opposed to mandatory, and eliminates the 10% minimum award requirement;” and “It would mandate that the SEC inform an entity targeted for an investigation initiated by a whistleblower tip before commencing an enforcement action.”

In conclusion, the authors state as follows.  “This legislation reflects the recommendations of some practitioners within the antibribery community.  In particular, many commentators have advocated that Congress adopt a requirement that whistleblowers internally report misconduct prior to any disclosure to the SEC.  Although it remains to be seen whether this legislation will be enacted, the debate as to how to effectively structure and implement a robust whistleblower program is certain to continue.  Irrespective of the outcome of this debate, the new SEC whistleblower program likely will put additional pressure on legal and compliance systems to readily identify and respond to possible violations of the securities laws.”

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