Heard Off the Street: SEC Reforms Encourage Whistle-Blower RewardsNovember 23, 2013 – In The News
Ernest Badway was quoted in the Pittsburgh Post-Gazette article “Heard Off the Street: SEC Reforms Encourage Whistle-Blower Rewards.” While the full text can be found in the November 23, 2013, issue of the Pittsburgh Post-Gazette, a synopsis is noted below.
The Securities and Exchange Commission recently announced the largest payment the agency has made to a tipster, more than $14 million, since instituting the whistle-blowing program in August 2011. In this case, the agency recovered “substantial investor funds” from an unidentified investment scheme.
One of the biggest challenges these tipsters pose to the SEC is checking the credibility of their stories and separating those who have genuine information from disgruntled employees.
According to Badway, some tipsters “view this as just another Powerball exercise. Everybody believes they are a whistle-blower, and the day they believe they are a whistle-blower is the day they are terminated.”
Badway says that whistle-blowers who provide credible, significant information do not have to know everything, just enough to put SEC investigators on the right track.
Even if a tipster stands a chance at collecting their reward, they should realize that this is not easy money. Their employers may fire them or impose other sanctions. Their motives and their past may be called into question.
“A whistle-blower should have legal representation because there are always ramifications,” says Badway.
Now that the SEC program is up and running, companies are strengthening their internal programs.
“Companies are taking these complaints more seriously. They want the opportunity to [rectify] things before the government comes in and says something is wrong,” Badway says.