It’s only two weeks to go before the SEC is due to announce its regulations concerning the whistleblower provisions of the Dodd-Frank Act. In his recent white paper, “The SEC Whistleblower Program Under the Dodd-Frank Act,” attorney Kurt E. Wolfe of McGuireWoods LLP takes a very succinct approach to describing the expected regulations and how companies should proceed. Wolfe points out two areas where he believes the legislation may fall short, including: 1) the anticipated flood of unsubstantiated reporting to the SEC because of the perceived “lottery” aspects to the rules; and 2) the fear that the new SEC provisions will drastically weaken ongoing internal compliance reporting efforts.
We know first-hand that ethics hotlines benefit companies and bolster their entire corporate culture through awareness and commitment to an ethical workplace. It looks as if the SEC will not mandate that whistleblowers utilize internal resources before reporting directly to the commission, which is distressing. While the rules will not prevent would-be whistleblowers from using existing internal channels, neither does it do anything to promote them.
The paper also makes suggestions on what to do now. It’s all about three simple things: policy, reporting and awareness. That is, take a look at your policy structure and make sure your mandates are clear, efficient and accessible to all. Make sure your employees and other key stakeholders understand your internal reporting programs and how to use them. Re-evaluate your incident intake procedures as well as the investigatory process. Wolfe sums it up: “Dodd-Frank protects a significantly broader spectrum of disclosures than the anti-retaliation protections set out in Sarbanes Oxley. Make sure your policies are in sync, and advertise your policies internally. It is important for employees to know how to report.”