Does your hotline ring off the hook with complaints? Is it silent? Are the complaints mostly that the employee thinks his boss is a jerk? The Network and BDO Consulting published their 2010 Corporate Governance and Compliance Hotline Benchmarking Report. The 2010 report provides an analysis of compilation of more than 500,000 reports from over … Read more »
Category: Whistleblower
Who Blows the Whistle on Corporate Fraud?
It takes a village. Alexander Dyck, Adair Morse, and Luigi Zingales found that fraud detection does not rely on standard corporate governance actors. Instead they found that employees, short sellers and analysts are the top sources in uncovering corporate fraud. The three researchers studied reported fraud cases between 1996 and 2004 for U.S. companies with … Read more »
SOX Whistleblower Protections at Mutual Fund Companies
We know that Sarbanes-Oxley offers protections to employees at public companies, but does it also protect employees at mutual fund companies? Yes. At least according to Judge Woodcock of the Massachusetts U.S. District Court. The Employees The decision is for two cases that were combined because of the common defendant. According to the decision, Jackie … Read more »
Media Leak is not Protected as a SOX Whistleblower
Leaking information to the media about bad financial controls is not protected by SOX whistleblower retaliation clause. Nicholas P. Tides and Matthew C. Neumann were working as “Audit IT SOX auditors” at The Boeing Company. They made several complaints about auditing deficiencies to their supervisors. They claimed “that Boeing’s auditing culture was unethical and that … Read more »
In-House Counsel as Whistleblowers under SOX
Section 806 of the Sarbanes-Oxley Act (18 USC §1514A) expressly authorizes any “person” alleging discrimination based on protected conduct to file a complaint with the Secretary of Labor and, thereafter, to bring suit in an appropriate district court. There is no exception for lawyers or in-house counsel. Recently, the Ninth Circuit tackled this issue in … Read more »
Whistleblowing in Europe – Legal Aspects
Jonathan Armstrong of Eversheds gave this webinar. (You can watch it yourself after a free registration: Whistelblowing: Challenges in running a helpline in Europe) These are my notes: Why have a hotline? A hotline can help the headquarters connect with offices abroad. They can help internalize issues and the flow of information. The main reason … Read more »
It’s Not Fraud, But it Can’t be Ignored
This session was a “dark session” so I am not sharing my notes, but will share a few themes that emerged. Most hotline complaints are for incidents that are not true compliance or ethics issues. Most studies show that HR issues tend to be almost half of the complaints. There were two camps of thoughts. … Read more »
Hotline for Improvements
I overheard at a recent compliance meeting about the possibility of using the whistleblower hotline to also solicit comments for improvements to the operations of your company. Those of you with active hotlines you probably get enough false positives coming through (HR, workplace disputes, …) that you probably don’t want anything else coming in. But … Read more »
Whistleblower Programs: Challenges for Multinational Companies
Katherine D. Ashley, Gary DiBianco, Dana H. Freyer, Matthias Horbach, Pierre Servan-Schreiber of Skadden, Arps, Slate, Meagher & Flom LLP put together a nice article addressing the challenges of exporting the whistleblower requirements under Section 301 of Sarbanes-Oxley to operations in the European Union: Whistleblower Programs: Challenges for Multinational Companies. Section 301 of the Sarbanes-Oxley … Read more »
FINRA Announces Creation of “Office of the Whistleblower”
FINRA announced that they have created a new Office of the Whisteblower to expedite review of high-risk tips. FINRA Senior Vice President Cameron Funkhouser will oversee this new office. What’s not clear to me is how this new initiative differs from the existing File a Regulatory Tip procedure. According to the press release, this new … Read more »