Do I Have to Report Fraud to an Internal Compliance Program Before Going to the SEC?
Preparing to blow the whistle on a securities fraud violation can be a daunting task. The Sarbanes-Oxley Act of 2002 (SOX Act) required employers to implement an internal compliance program that would allow would-be whistleblowers the opportunity to report tips.
The SOX Act does not, however, mandate that the whistleblower report internally before heading to the Securities and Exchange Commission (SEC). The SEC does encourage whistleblowers to report to their internal compliance programs, as well as to the SEC.
This is to ensure that the tip from the whistleblower makes it to the SEC and isn’t covered up by the corporation or individual, in addition to allowing the whistleblower to go on record as having made the tip. This becomes critical when the SEC considers whether you’ll be eligible for an award.
The Importance of Internal Reporting
The SEC supports reporting information you may have about securities violations to your internal compliance program or the anonymous hotline at your company. The hope is that the company will, in turn, report the violations to the SEC and conduct its own investigation before the situation is made worse.
Unfortunately, this has not always been the effect of the internal reporting programs. Many companies will attempt to cover up the violation and retaliate against the whistleblower by suspending, demoting, terminating, or harassing him or her.
By reporting internally, you are giving your company a chance to do the right thing. It’s important that you also report your findings to the SEC. This way, you’ll be protected in the event of retaliation, and no one else will be able to claim an award based on the tip you’ve provided once you’re on record as having made your information available.
Reach Out to an SEC Whistleblower Lawyer
When you make an effort to report wrongdoing within your company, you’re doing your part to protect the integrity of the work you do, as well as investor funds. If the company fails to do what’s necessary in reporting to the SEC and putting a stop to the scheme, you’ll at least have the satisfaction of knowing you did the right thing.
If you’d like more information on internal compliance programs or are considering becoming a whistleblower and would like to discuss the specifics of your tip with an experienced attorney, contact an SEC whistleblower lawyer at Meissner Associates today. You can fill out the contact form below or give us a call at 1-866-764-3100.