Survey Suggests SEC Whistleblower Program Has Not Significantly Affected Internal Reporting, Still Companies Should Do More

In August and September 2011, TheCorporateCounsel.net surveyed the impact of the SEC Whistleblower Program and how companies are responding to the whistleblower provisions in the Dodd-Frank Wall Street Reform and Consumer Protection Act. Contrary to the significant concerns expressed by the corporate community during the legislative and regulatory process, more than a year after the enactment of Dodd-Frank, only 6% of respondents believed that fewer whistleblowers claims were reported internally as a result of the new program and 3% believed that more whistleblower claims were reported internally because of the program.

According to the survey results, almost 40% of respondents indicated that, in response to the SEC Whistleblower Program, their company had or was planning to change existing policies to address the new rules. This is a positive sign. Responsible organizations should regularly evaluate existing compliance policies and must take every step to ensure that internal reporting of misconduct is encouraged at every level. Nevertheless, a surprising 87% of respondents indicated that their organization hadn’t yet, were not sure that it would, or had decided not to create a system to alert employees of the benefits of reporting internally. For these organizations, the lack of such a system represents a fundamental compliance weakness and is likely to lead to a higher number of securities violations and increased external reporting.