SEC Makes Use of Whistleblower Tips
The SEC’s new whistleblower program which was effective in early August 2011, has improved the quality of tips reported to the SEC and has resulted in numerous large suits. Recently, a tip given to the SEC by an accounting executive of a company on the edge of going public, had information concerning misleading financial statements, and had kick-started a SEC investigation. This is just one of many internal investigations and SEC inquiries that have originated from whistleblower tips under the new program.
Some company insiders are also taking advantage of the program. An insider who felt uneasy about a business deal that he had worked on presented his concerns to the SEC and in turn, the SEC uncovered other deals within the company that had likely problems.
Whistleblowers may be former employees ranging from an insider, as in the case above, who has had some connection to the wrongdoing to those who witness the wrongdoing but aren’t connected. Some whistleblowers submit tips completely on their own, while some are anonymous and only share their information through their attorneys.
Information on the program can be found at: http://www.sec.gov/whistleblower