When Congress was creating the U.S. Securities and Exchange Commission’s program for rewarding whistleblowers, corporations pressed for a requirement that tipsters first report suspected misconduct to their employers. Without that mandate, the companies argued, insiders would go straight to the SEC and ignore the internal reporting systems in which industry had invested millions of dollars.

That requirement was not adopted, but corporations did not walk away from their lobbying push empty-handed. The SEC, since the inception of the whistleblower program in 2010, promoted internal whistleblowing, even incentivizing it by awarding higher bounties to insiders who first take their concerns to their employers.

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