December 8, 2010
Provide Companies with Visibility to Their Own Issues that the SEC Chooses Not to Pursue
The proposed Whistleblower program will undoubtedly cause some reporters to bypass their companys Ethics Hotline and go directly to the SEC. Such cases may not be important enough for the SEC to pursue but could be of interest to the respective company. However, not all cases reported directly to the SEC will warrant action for a variety of reasons. For such cases, this will represent lost opportunities for companies to investigate matters not reported through their Ethics Hotlines.
To remedy this potential problem, the SEC should devise a system in which an appointed official of a company, a Chief Compliance Officer for instance, should be notified or be given access to a secure repository of such cases applicable to their company. If this system would be time consuming and costly to implement and operate for the SEC, it can be provided as a service to companies at a minimal fee. Appropriate details of the case should be provided to the company to assist in further follow up of the matter. In the event that the issue involves senior management, an additional independent recipient like the chairperson of the Audit Committee can be included.