Saw this mentioned on the FCPA Blog last week.
The passing of the Financial Reform Bill is likely to yield even more FCPA cases for the SEC to pursue, as the bill has what is being called a “whistleblower bounty” in it. In other words, whistleblowers who reveal securities law violations (including the FCPA) at private corporations will receive between 10 and 30 percent of any fines imposed by the government over $1 million. Considering how large recent FCPA recoveries have been, whistleblowing should prove to be a great way to pick up a few extra dollars.
This is especially worrisome for those companies at risk of violating the FCPA because, as the FCPA Blog noted, the SEC has been holding companies strictly liable for FCPA violations. So, no matter how stringent the compliance program or how well-meaning the leadership, a violation will lead to liability.
What options does this leave the well-intentioned corporation? Well, despite the strict liability approach of the FCPA, a strong and effective compliance program is key. It may not save you from liability, should a violation occur, but it will instill the right culture throughout your business. Further, having an effective compliance program should tip you off to any violations that may be occurring (hopefully before whistleblowers catch wind). With that knowledge, a corporation can self-report any discovered violations and catch a discount on any fine that must be paid. Self-reporting may be a difficult pill to swallow but, right now, it seems to be the best option on the table.
Jason Lee
U.S. Legal Consultant
Allen & John Law Firm
www.allenjohn.com
Date: July 07, 2010
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