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SEC's Whistleblower Chief Disappointed in Questions from Corporate America
The Litigation Daily
Sean McKessey has a message for companies and their lawyers: Stop trying to dream up clever ways to prevent employees from taking whistleblower tips to the Securities and Exchange Commission.
Since February 2011 McKessey has been the chief of the SEC's Office of the Whistleblower, which was created the previous July (under outgoing chairman Mary Schapiro) to provide a financial incentive for tipsters to come forward. A former inhouse lawyer for Altria Group Inc., AOL Inc., and Caterpillar Inc., McKessey has worked hard to raise the profile of this program, which rewards eligible corporate whistleblowers with up to 30 percent of the sanctions recovered from securities violators.
I talked to McKessey last week, after the agency issued its 15-page annual report for the program. In a press release, the SEC touted that in fiscal year 2012 it received more than 3,000 tips. But I was struck by the fact that even though the government has created a whopping $453 million fund to pay these whistleblowers, all those tips have so far led to just one single award totaling a paltry $46,239.16.
McKessey explained in detail how the award application process involves a lot of statutorily-imposed waiting periods that can delay the issuance of a final award, and said that it's too soon to see how successful the program will be. "We're not declaring victory," he said. "We're still in the early days of the program. We need to be patient and allow these things to play themselves out."