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How to Get Whistleblowers to Come to You Instead of the SEC

By Cynthia Hsu, Esq. on January 05, 2012 5:57 AM

Let's face it: you'd rather have your employees report securities violations to you first before they tell the SEC.

Internal reporting has its advantages. You'll be better prepared. You also won't get suddenly drawn into a SEC investigation without prior warning.

But how do you get your employees to report violations to you first? Below are a few tips to help:

Set up policies to address whistleblowers.

If you don't have a protocol or procedure through which employees can report violations, set one up now. One way you can encourage internal reporting is to allow employees to report anonymously.

Make sure employees know about the program and are trained.

Education is vital. Many employees might not know that employers are barred from retaliating against reporting employees. This anti-retaliation provision was passed as part of the Dodd-Frank Act. Ensure that employees are properly trained and know about these provisions.

Ensure managers are trained.

Let managers and business executives know about the anti-retaliation provisions. Train and educate them. This way, employees will feel secure enough to report potential violations to company officials.

Sing the benefits of internal reporting.

Employees might get a higher award if they report internally first, reports Lexology. Plus, employees typically won't lose out if they report to the company. All information reported by the company to the SEC will be credited to the employee. Inform employees that they won't lose out if they report to the company first.

Most of all, you might want to specifically encourage employees to report securities violations. Set up a meeting where you emphasize the importance of business ethics. Make it a priority, and employees might follow suit.

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