Compliance officers are getting a lot of press these days. Not all of it good. A series of recent enforcement actions found individual compliance officers personally liable for the misdeeds of their company. A recent Wall Street Journal article says that some folks are so frightened that they are leaving the profession. Like most things in life, however, there is usually a silver lining in the darkest of storm clouds.
The federal False Claims Act, the FIRREA statute and the SEC Whistleblower Program can all pay compliance officers huge cash awards for information about misconduct. Keep your mouth shut, however, and you run the risk of going down with the ship.
We can’t think of a worse outcome than being held responsible for conduct that wasn’t your idea and for which you didn’t profit. That is the reality today, however. And now New York State’s Superintendent of Financial Services wants the power to criminally prosecute compliance officers who fail to report misconduct.
Financial fraud hurts everyone. Shareholders lose money when they rely on phony financial statements and cooked books. Taxpayers lose when banks ignore anti-money laundering guidelines and let their banks be used by terrorists and criminal enterprises. Taxpayers also lose when companies overcharge Medicare, write bad mortgages or overcharge the government for goods and services.
Each of the above examples can be a perfect opportunity for whistleblowers.
Should compliance officers try to fix problems internally first? In most instances, yes (although the law does not require internal reporting before contacting authorities.) If no one listens, compliance officers have two choices, stay and risk the consequences or find a whistleblower lawyer that can weigh external reporting options.
There is an added benefit to external reporting, robust anti-retaliation laws.
People become compliance officers because they want to prevent fraud and corruption. It is an honorable profession. Some businesses don’t appreciate their efforts and only keep them around to “prove” they are a reputable business or to comply with certain banking and securities laws.
If you are faced with what to do when your employer won’t stop committing fraud, call us. We can take a bad situation and turn into an opportunity.
Although the press has focused on compliance officers being found liable for their employer’s misconduct, there have been several instances of compliance officers being paid huge awards for coming forward and becoming whistleblowers.
The choice is yours. If you can’t quickly fix the problem, contact us immediately.
For more information, contact attorney Brian Mahany at or by telephone at (414) 704-6731.
MahanyLaw – America’s Whistleblower Lawyers