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In January 2024 the US Attorney’s Office for the Southern District of New York (SDNY) set a shockwave through the business world by announcing a new whistleblower pilot program. To understand what the policy says and what it likely means for compliance programs, we spoke with Todd Haugh (LinkedIn), Associate Professor of Business Law and Ethics, Arthur M. Weimer Faculty Fellow in Business Law at the Kelley School of Business at Indiana University.
Under the policy, he explains, individuals who have participated in a fraud may be eligible for a non-prosecution agreement, if the individual meets three key criteria:
- They provide information that is not previously known to prosecutors and is produced voluntarily, not subsequent, say, to an arrest.
- The information is full, substantial and truthful.
- The individual is not otherwise disqualified, such as serving as a government official or the CEO or CFO of the company.
Given the incentives already in place for companies to self-report wrongdoing, this is in many ways an extension of what already exists.
However, it’s impact should not be underplayed. The SDNY is a leader in white collar prosecutions and other US Attorney’s offices are likely to follow suit. At least one already has.
Second, while the SEC has encouraged whistleblowing at publicly traded policies, the SDNY policy is open to public, private and even non-profit organizations.
The new policy also may create situations in which employees and their employers find themselves in a race to disclose first.
This, in turn, means that organizations need to significantly increase their efforts to create a culture that encourages internal whistleblowing. That includes creating easy paths to follow for potential whistleblowers and prompt investigations.
Listen in to learn more about the policy and how your compliance program may need to evolve as a result of it.