Compliance Officer Sues As Whistleblower

On November 18, 2021, online service/publication Regulatory Compliance Watch published an article by Carl Ayers entitled “Compliance officer sues as whistleblower.”  As the title suggests, the article focuses on a lawsuit brought by a former compliance officer who worked at J.P. Morgan Chase, alleging she was terminated after “she repeatedly tried to address material misconduct . . . she reasonably believed broke the laws, regulations and rules designed to prevent fraud . . . .”  According to the complaint, the company also “misled or omitted information” in public and regulatory filings, and there was institutional hostility toward reform.

Jordan Thomas was quoted in a discussion of the dilemma faced by a compliance officer/whistleblower.  SEC rules require a compliance officer to wait 120 days after reporting concerns internally before filing a whistleblower complaint with the agency.  There are exceptions, namely, in the event the compliance officer believes waiting would bring “substantial injury” to their company or its investors, or when the company is actively impeding an investigation.  However, absent any exception, a compliance officer may face retaliation from their employer and/or be beaten to the SEC by another whistleblower during the waiting period.

Jordan observed that a compliance officer can mitigate some risk by internally reporting anonymously, perhaps using a company hot line.