Home » SEC Increases Oversight to Include Corporate Whistleblowers
As government crackdown in the financial sectors occur across the country, companies are keeping a close watch on how they operate their businesses and what exposure might occur. With the additional increase in oversight over fraud and other issues inside corporations, the SEC has been increasing its oversight and taking a closer look at companies.
According to Ed Tomko, head of the White Collar Crime practice at Curran Tomko Tarski, "As of this past Friday, the SEC now has greater ability to extract information from employees of corporations and others involved with those employees. On Friday, a $1 million payment was made by the SEC to Karen and Glen Kaiser who provided documents that helped the SEC build its case against Arthur J. Samberg, founder of Pequot Capital Management (a hedge fund) and David E. Zilkha, a former Microsoft employee." Karen Kaiser was married at one time to David Zilkha. "This has broad reaching implications for public companies as well as businesses operating in the financial sectors," said Tomko.
This is the largest amount awarded by the SEC to whistleblowers in an insider-trading case, Tomko said. "This is all based on the new Dodd-Frank Act that was just signed into law last week by President Obama. The new legislation has broad implications across the financial and corporate sectors and gives increased power and reach to the SEC. As a result, there is the potential now for whistleblowers to be enticed by lucrative fees they will receive for providing information to the government. This can become a slippery slope for businesses. This can now provide possibly a powerful incentive for an employee or individual related to an employee who know of a securities violation to contact the SEC and provide information that may lead to a large payment in exchange for the information. If the information provided leads to an SEC enforcement action that results in monetary sanctions of more than $1,000,000, the SEC must pay that individual between 10 percent and 30 percent of those amounts. There are other elements as well in the Act that provide for far reaching expansion of SEC powers to garner information and in attempts to place more control on the financial sector and publicly traded companies."
According to Tomko, this new movement by the SEC and expanded powers will mean businesses need to enhance and enforce their internal compliance structure in order to prevent any violations of the federal or state securities laws.
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This month in Security magazine, we highlight COVID-19 and enterprise security's response. How has the pandemic changed business continuity plans, and what lessons have been learned? Also this month, we profile Chris Hallenbeck, CISO at Tanium, his view on metrics and information security. In addition, security experts discuss video analytics, how to make AI work within your cyber strategy and more.