SEC Solicits Comments on Effect of Whistleblower Bounty Program on Existing Corporate Compliance Programs

Originally published October 26, 2010

Keywords: SEC, whistleblower, Dodd-Frank, corporate compliance, SOX,

The Dodd-Frank Act's new whistleblower provision—which entices would-be whistleblowers who provide "original information" leading to a recovery of $1 million or more in any resulting enforcement action with up to 30 percent of the total amount collected—has become a cause for concern for the architects of corporate compliance programs. This "whistleblower bounty program"—tucked away in Section 922 of the Dodd-Frank Act—gives employees a strong incentive to bypass internal corporate compliance processes in favor of contacting the SEC directly when they are cognizant of infractions and misconduct, prompting some commentators to question whether the Dodd-Frank whistleblower program is at odds with the Sarbanes-Oxley (SOX) objectives of strengthening internal corporate compliance programs.