Qui Tam

SEC Whistleblower Office Has First Director--Sean McKessy

By Finch McCranie, Esq.

Just as we have followed closely the development of the IRS Whistleblower program since Congress authorized it in December 2006, we are watching the birth of the new SEC Whistleblower program. In 2010's Dodd-Frank Financial Reform law, Congress mandated the creation of what could be the first meaningful SEC and CFTC Whistleblower programs.

Today, the SEC took a major step in announcing the first head of the nascent SEC Whistleblower Office: Sean McKessy, a former Senior Counsel in the SEC's Division of Enforcement from 1997 to 2000.

According to the SEC's announcement, "Mr. McKessy served as corporate secretary for both Altria Group, Inc. and AOL Inc., and as securities counsel for Caterpillar, Inc. In these roles, Mr. McKessy developed and supervised internal compliance and reporting programs related to the federal securities laws, served as corporate compliance officer, and coordinated the reporting of potential violations to boards of directors."

Robert Khuzami, Director of the SEC's Division of Enforcement, praised Mr. McKessy as "uniquely positioned to oversee the Commission's whistleblower program. The Enforcement Division and whistleblowers alike will greatly benefit from Sean's first-hand experience in bringing enforcement cases, handling whistleblower complaints and understanding the workings of internal corporate compliance programs."

We hope that Mr. McKessy seeks the advice of IRS Whistleblower Office Director Steve Whitlock, who has built the first IRS Whistleblower Office over the past four years. Mr. Whitlock's Office has attracted many claims in the billions of dollars that will help stop tax cheats from burdening other taxpayers with their share of the tax load.

The SEC would also do well to resist industry's pleas to ignore principles that have worked so successfully for 25 years in encouraging whistleblower claims under the False Claims Act, the nation's major whistleblower law.

Last month, I had the opportunity to visit with SEC Chairman Mary Schapiro, Director Khuzami, and SEC staff, and then separately with Commissioners Luis A. Aguilar, Kathleen L. Casey, Troy A. Paredes, and Elisse B. Walter, to discuss the proposed rules for the new SEC Whistleblower program.

Each of the SEC Commissioners seemed interested in how the False Claims Act and the IRS Whistleblower program have encouraged significant claims--with no harm to corporate compliance programs. Let's hope each of them fully uses this opportunity to stop the next round of Madoffs, by establishing the nation's first meaningful SEC Whistleblower program.

Full post as published by Whistleblower Lawyer Blog on February 18, 2011 (boomark / email).