On August 12, 2011, the SEC’s whistleblower rules became effective, establishing the procedures for whistleblowers reporting violations to the SEC under Section 922 of the Dodd-Frank Act. Public companies should review their internal reporting policies to encourage internal reporting and consider taking the following steps:9
- Set the tone at the top. The CEO and board need to make it clear throughout the organization that whistleblowers who bring potential violations to the company are highly regarded by senior management. Bringing potential violations to the company should be strongly encouraged and the CEO should clarify such activity will be rewarded by senior management and not punished.
- Training. Managers should be trained to avoid taking actions against those that report potential violations that may be considered retaliatory and educate employees making clear to them that retaliation will not be tolerated.
- Keep whistleblowers in the loop regarding the company’s internal investigation progress. Many whistleblowers go outside of their organization to the SEC or another regulatory authority when they believe the company ignored, did not adequately address or refused to investigate their concerns. As a result, it is critically important that the whistleblower is kept in the loop regarding the company’s progress (without revealing the details of the investi gation or fi ndings that may jeopardize the investigation). In addition, it is important that the whistleblower is assured by the General Counsel or other person investigating the matter that the company is taking the whistleblower’s concerns seriously and addressing any issues or violations of law raised by the whistleblower.