With the May 25 U.S. Securities and Exchange Commission decision to create a $300 million whistleblower program, companies would be well advised to expand their internal compliance programs to take advantage of Department of Justice programs to reduce criminal and civil liability for self-reporting and cooperation. The SEC action follows the Dodd-Frank regulatory law, which provides a reward for companies whose employees first report suspected wrongdoing through internal compliance. When I spoke at compliance symposiums sponsored by Dow Jones in Washington in March and the American Bar Association in New York in May, there was considerable corporate interest in such programs. Now there is new reason for greater concern.
SEC Chairwoman Mary L. Schapiro said the new rules were important to the agency because it has limited resources, and needs “to be able to leverage the resources of people who may have first-hand information about potential violations.” This was the same rationale of DOJ when its Antitrust Division established a leniency program in 1978 for the first to confess and when the Criminal Division, in its 2008 Morford Memorandum, provided guidelines for deferred and nonprosecution agreements.
