When the SEC released proposed whistleblower regulations required under Dodd-Frank, they requested comments from the public. In response, Arent Fox, a law firm that represents Wal-Mart and drugmakers Elan and Genzyme, recently sent a letter to the SEC. In it, the firm advocated that the SEC first require employees to explore internal corporate compliance procedures before turning to the SEC. Additionally, the letter also requested a “no-bite” strategy in which the SEC refuses to accept tips from those with a fiduciary responsibility to the company, including top officers and directors.
Stephen Kohn, the Executive Director of the National Whistleblowers Center, sent his own letter to the SEC to address many of Arent Fox’s requests. In his letter, Kohn refers to the “Corporate Lobby” and objects to many of their proposals. Kohn labels Arent Fox’s request mandating employees first utilize internal corporate procedures “an obstruction of justice.”
Kohn continues to explain that such a request would illegally limit the right of employees to anonymously disclose information to law enforcement agencies- a right guaranteed by both the Sarbanes-Oxley and Dodd-Frank Acts. In his letter, Kohn further points out that:
“There is a long record demonstrating that such programs have often failed to fully investigate wrongdoing, to honor employee confidentiality and to act in a truly independent manner. As such, employees must have a choice as to how they blow the whistle, based on their own assessment of the wrongdoing they intend to expose, the reputation of a company’s ethics and compliance program, and/or their desire to remain as anonymous as possible.”
Letters from Arent Fox and Stephen Kohn can be found here: http://www.whistleblowers.org/index.php?option=com_content&task=view&id=1155&Itemid=71