As the whistleblower-initiated investigation into the News Corp scandal continues, Dodd-Frank’s whistleblower protection rule becomes final in August. The new rule provides that individuals who voluntarily provide original information to the Securities and Exchange Commission about possible U.S. securities violations that result in a successful enforcement action (aggregating over $1 million in penalties) may collect an award of 10 to 30 percent of the amount recovered. The rule applies retroactively to any tips made after July 21, 2010—Dodd-Frank’s enactment date. As companies look to the future and the potential impact of this rule on corporate compliance programs, a look back at the past and the Enron scandal can provide some insight on addressing Dodd-Frank.
Enron’s Code of Ethics in July 2000 was 61 pages long; it addressed a wide range of topics, from the insider trading laws to the FCPA. Enron’s code also addressed whistleblowers—two years before Sarbanes-Oxley’s prohibition against whistleblower retaliation and the requirement that public companies’ audit committees establish mechanisms for whistleblowers to report potential misconduct. In the last few pages, Enron’s code notes that “[Enron] will not condone any form of retribution upon any employee who uses the reporting system in good faith to report suspected wrongdoers, unless the individual reporting is one of the violators. [Enron] will not tolerate any harassment or intimidation of any employee using the reporting system.”
