The word WHISTLEBLOWER can strike fear into the hearts (and pocketbooks) of corporate compliance officers. The Dodd-Frank Wall Street Reform Act creates an SEC Office of Whistleblower which reviews employee’s claims that their company has violated securities laws. Companies need to be extremely cautious when taking any action with regard to an employee who provides information to the SEC’s Office of the Whistleblower. Dodd-Frank charges the Office of Whistleblower with documenting and tracking employee claims and for those claims that result in monetary sanctions against the company, the reporting employee may be awarded 10% - 30% of the funds that are collected from the offending company. There is strong monetary incentive for employees to report suspected securities violations to the Office of the Whistleblower.

The real danger for companies is in how they deal with an employee who has reported them to the Office of the Whistleblower. There are vibrant anti-retaliation provisions protecting reporting employees even where no securities violations have been found. Before any action is taken affecting employment status, the company should make sure that they will not be violating anti-retaliation provisions.

For additional information on Whistleblower reporting regulations, please click here.