Whistleblower Hotline Requirements

Whistleblowers should be wary of corporate hotlines. Custodians, lawyers, accountants, compliance and risk owners, and even culprits can participate in the SEC`s whistleblower program. In many cases, these insiders may have high-level information about misconduct that causes serious harm to investors. While some individuals, employees and external contractors may be excluded from participation, there are of course exceptions. To address the reasons why employees may be reluctant to use an internal whistleblower helpline and to enable an effective whistleblower helpline and reporting program, boards and management should consider the following: A compliance program should also provide a mechanism for reporting allegations of misconduct in the chain of command. When a complaint is filed, the Chief Compliance Officer (COO) must be prepared to respond appropriately. If employees feel that their reports are being ignored or that nothing is being done to clarify the allegations, they can report their allegations to the authorities or the media. In recent years, whistleblower reports to the Securities and Exchange Commission have won high cash prizes for whistleblowers who have exposed corporate fraud and corruption. When an employee comes forward to report misconduct within the organization, that person may provide an important service to the organization or the public, but they also expose themselves to the risk of reprisal, ranging from harassment to dismissal or other legal consequences. Let`s look at the internal controls your company should put in place to protect whistleblowers and look at how companies should handle case management before, during, and after an employee`s whistle. To be considered for an award under the whistleblower program, you must submit your information either through our online tips, complaints, and recommendations questionnaire and answer “yes” to questions about participating in the whistleblower program, or by completing our printed TCR Form and mailing or faxing it to the whistleblower`s SEC office.

100 F Street NE, Mail Stop 5631, Washington, DC 20549, fax (703) 813-9322. In addition, you must personally sign the affidavits on these forms in the sections provided. See rule 21F-9. Under the new rule changes, you must submit a TCR form to the Commission within 30 days of submitting your information or, if later, within 30 days of becoming aware of the request to submit the TCR form. You will be constructively informed of the TCR submission request if you are represented by a lawyer. If you do not submit your information on the TCR form on time, you may not be eligible for a reward. See FAQ 10 on changing the rule. The SEC investigates possible violations of federal securities laws. In general, the more accurate, credible and timely a whistleblower is, the more likely it is that the tip will be passed on to investigators for further follow-up or investigation.

For example, if the tip identifies individuals involved in the system, contains examples of certain fraudulent transactions, or lists non-public documents proving fraud, the tip is more likely to be assigned to law enforcement officers for investigation. Before setting up a hotline, you should establish clear and transparent procedures and protocols for interacting with hotline users and handling the information they report and other incoming messages or requests. Any allegation of misconduct reported by a whistleblower via the hotline must be properly recorded in a register, subject to initial review and assessment, and then forwarded to the relevant department or function of the company, which will investigate thoroughly and impartially. It is also important to provide a mechanism to provide feedback on the status of an investigation to the hotline user who initially brought the issue to the attention of the issue. Benchmarking helpline data with peer and industry data should also be part of an assessment of a company`s compliance and ethics program and can provide valuable insights into the effectiveness of a company`s whistleblower helpline. For example, a high number of calls to a company`s helpline (compared to colleagues and its industry) may indicate that the company has significant compliance issues and may have an ineffective compliance and ethics program. Conversely, a high number of calls to the helpline may indicate that the helpline is working as intended, that the Company`s employee compliance and ethics training program is effective, that awareness and confidence in the Corporation`s compliance department has increased, and that the Board and management are setting the right tone by strengthening internal reporting mechanisms. including hotline and ethical culture.