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Earlier this year, the SEC announced several awards totalling over $120 million to whistleblowers who provided information to the regulator which ultimately led to an enforcement action. With enforcement action from the regulator not slowing down anytime soon, and regulations due to evolve following the upcoming election, proactive engagement and adaptation will be crucial to recognising risks up front to identify and prevent wrongdoing in your process.
In August, two whistleblowers were awarded a prize of over $98 million. The first whistleblower provided a tip that helped to prompt the SEC to look into the matter in more detail, with the second offering significant information pertinent to the case and ongoing support.
Later that same month, the SEC awarded two more awards, one of $4 million and one of $20 million. These were presented to two whistleblowers for helping to open an investigation and providing ‘information and substantial cooperation’ which proved ‘critical to the success of the actions’. The financial rewards aim to incentivise the importance of firms working with the regulator to uphold robust compliance expectations.
According to a report from the SEC, whistleblowers can become eligible for an award if they are able to provide ‘original, timely, and credible information’ that helps the regulator bring the perpetrators in question to justice. These awards can range from 10 to 30 percent of money collected when the monetary sanctions exceed $1 million.
Don’t wait for the whistle to blow
The SEC expects that advisors evidence and promote a robust compliance program and are upfront when identifying any potential risks or lapses. Compliance directors need to therefore get in front of risks and issues before they occur, and be proactive as soon as they materialise. Regularly review your compliance and policies to make sure they align with any changes or predicted changes in the market. Your whistleblowing programs must be up to date to make sure you can get on top of any identified risks that could affect your staff and prevent similar issues from cropping up in the future. A strong whistleblowing process will ensure that your people are supported, market integrity is upheld, and you avoid any potential sanctions that could damage your reputation and brand.
How can Bovill Newgate help you ensure your whistleblowing program is fit for purpose?
Our team advises on and develops comprehensive compliance assessments and plans, capturing both customer and organisational requirements. We can help you demonstrate to the regulators that you understand and actively manage your internal compliance program.
Our team can support by providing:
- health checks and internal audits, reviewing policies, procedures and controls including the development of your business-wide documentation
- tailored mock exams to help identify your compliance pain points and strengthen your policies and procedures, including training staff and the wider business
- preparing detailed reports and summaries to address any deficiencies or summarize staff interviews.
Get in touch if you’d like to find out whether your firm is in scope for an examination or want to discuss other solutions to strengthen your compliance culture and processes.
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