If you thought that audit or compliance professionals were ineligible for whistleblower awards, think again. The Securities and Exchange Commission (SEC) awarded today more than $300,000 to an auditor whose “high-quality information and continuing assistance significantly contributed to a successful enforcement action”.
The whistleblower became aware of the potential securities law violations in connection with audit-related responsibilities. Although individuals with audit or compliance responsibilities are generally not eligible for awards, there are certain exceptions. In this case the auditor had a reasonable basis to believe that the entity he was auditing would impede the SEC’s investigation.
This is actually the 4th time the SEC has paid an award to a whistleblower with internal audit or compliance related responsibilities.
Last March, The SEC awarded $450,000 to a compliance professional. The whistleblower first reported concerns internally within the company. But after making reasonable efforts to work within the company’s compliance structure, and suffering unique hardships as a result, the compliance professional reported to the SEC after the requisite time period had passed (120 days), ultimately leading to an enforcement action against the Company.
In 2014, the SEC announced a $300,000 award to an audit and compliance professional. A few months months later, a compliance officer received an award of between $1.4 million and $1.6 million from the SEC.
One would think that audit & compliance professionals, whose duties entail having access to sensitive information and whose roles are to mitigate business misconduct would normally be excluded from reporting violations and whistleblowers awards… After all, doesn’t this present a conflict of interest? But no, there are certain exceptions, and the regulations implementing the Dodd-Frank Act address these exceptions.
The SEC has awarded more than $731 million to 124 individuals since issuing its first award in 2012.
Whistleblowers may be eligible for an award when they voluntarily provide the SEC with original, timely, and credible information that leads to a successful enforcement action.
Whistleblower awards can range from 10-30% of the money collected when the monetary sanctions exceed $1 million.
The “unique hardships” a whistleblower may have suffered are redacted in the SEC public orders. As set forth in the Dodd-Frank Act, the SEC protects the confidentiality of whistleblowers and does not disclose information that could reveal a whistleblower’s identity.
For more information about the whistleblower program and how to report a tip, visit www.sec.gov/whistleblower.
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