The SEC recently announced that they awarded the single largest individual reward ever – a $50 million whistleblower award to an individual who recorded misconduct by a company. The SEC Whistleblower program has reached $500 million in total awards which has been proven to encourage the reporting of wrongdoing, in turn, protecting investors and combating fraud.
What do I take away from this?
This is a reminder to you that in the past the SEC has commented on Whistleblower related issues when reviewing advisors. You should review your policies and separation agreements to ensure that nothing could be construed by the SEC as prohibiting an individual from communicating directly with the Commission staff about a possible securities law violation. This should have you thinking about your Whistleblower policies and procedures to ensure they are reasonably designed and operating effectively.
Are your Whistleblower policies complying with the rules?
The SEC has noted deficiencies as part of recent examinations of RIAs related to Whistleblower policies. Contact us to see if you comply.
The SEC released a Whistleblower Risk Alert back in 2016 on Examining Whistleblower Rule Compliance. This piece offers recommendations of what you should be doing to keep your program compliant. This Risk Alert notes that materials such as compliance manuals, codes of ethics, employment agreements, and severance agreements are reviewed during an examination. You should review those for provisions pertaining to confidentiality of information and reporting of possible securities law violations that may raise concerns under Rule 21F-17.
If you are in need of assistance reviewing your Whistleblower Policy and other related documents and procedures, do not hesitate to reach out to us for more information on how we can help.