The SEC's proposed rulemaking on the Dodd-Frank whistle-blower provisions has drawn passionate proponents and critics alike.
David McCann, CFO.com | US
February 11, 2011
Very informative and nice article on whistle-blower. If you see professionally, its against the professional code of ethics that someone is telling about a prospective fraud due to financial benefits. If you see ethically and professionally, this is their duty to disclose any probability of fraud to the concerned authorities. On the other side if we analyze the case practically, employees usually hesitate to disclose such information due to the fear of their jobs. Offering such incentives may overcome their anxieties and give them a satisfaction even if they lose their jobs they will have enough money to support their daily expenses. Also in my opinion there is not other way to prevent from fraud except offering financial benefits to disclose probabilities of fraud. There may be some other ways to reduce the chances of fraud in some areas like using sales proposal software to reduce chances of fraud in the selling activities of the company. Most importantly companies can use Virtual Data Rooms to store company confidential information in a highly secured way so that no one is able to leak company's financial information to the competitors. For example, if a company is going to be acquired by an company and if this information leaks out to the market the company share price may decrease dramatically which may result in reduction in the company's selling price and goodwill of the company may be jeopardized. using Virtual Data Rooms means all the transaction would be undertaken in a secure manner and no one would be able to leak out any information. I agree with you completely that "There also is the possibility that the opportunity for an employee to earn a big monetary award could exacerbate the effects of fraud in some cases. For example, someone might wait for a period of time before reporting a fraud in order to influence a larger recovery by the SEC". It's 1005 right. Thanks for such a great post.
Posted by Cameron Nabeel | March 02, 2011 02:59 am© CFO Publishing Corporation 2009. All rights reserved.