The Securities and Exchange Commission’s whistleblower rewards program has prompted over 50,000 tip-offs in the last decade that have led to public companies paying almost $5 billion in fines and penalties.
This is an embarrassing and costly state of affairs for some of the world’s most innovative companies, and something needs to change. If public companies want to stem the flow of fines, the solution is simple: Companies need to incentivize whistleblowers to report internally.
Self-Reporting Is Needed
Since the 2007 financial crisis and the introduction of the SEC whistleblower program in 2012, the chances of a company being fined for corporate misbehavior have increased dramatically. Self-reporting violations is the best way for companies to reduce fines and defuse the risk associated with employees reporting to regulators.
Self-reporting gives companies significant advantages when negotiating with regulators. The Justice Department recently issued guidance directing all its divisions to memorialize the benefits of self-reporting. Some of these benefits are already contained in prosecution guidelines, but others are more intrinsic, and include declinations, reduced fines, avoiding a monitorship, and reducing legal fees.
Benefits
A company can obtain a declination if they self-report, which means the company can avoid prosecution, fines, and penalties. Declinations, which are decisions by prosecutors not to pursue charges, also reduce legal costs and the risk of...
By Luminous Jannamike The Christian Association of Nigeria (CAN) has warned Rev. Isaac Omolehin of Word Assembly Ministry to retract what it described as false and defamatory claims about the body...