SEC Announces Whistleblower Award to Compliance Officer (with Lofchie Comment)

The SEC announced a whistleblower award of over a million dollars to a compliance professional who provided information that assisted an enforcement action against the whistleblower's company.

The SEC stated that it gave the award to a compliance officer who had reason to believe that disclosure to the SEC was necessary. The officer's intention was to prevent imminent misconduct from causing substantial financial harm to the company or investors.

Lofchie Comment: This SEC announcement prompts a few basic questions: Is it good public policy to pay whistleblower awards to compliance officers? Will doing so discourage firms from disclosing potential problems to their compliance officers? Should a compliance officer, who wishes to do the right thing and report a violation in an appropriately egregious situation to the regulators, do so without consideration of a whistleblower award?

See: SEC Order; SEC Press Release.