whistle blower

Reminder to New Jersey employers to provide required CEPA notice

New Jersey employers with 10 or more employees are reminded of their annual obligation to provide to their employees, in both English and in Spanish, the required notice under the Conscientious Employee Protection Act (the “CEPA”). The notice may be distributed in hard copy or electronic format, but having only a poster or a policy in a handbook does not fulfill an employer’s notice obligation under the CEPA.

Enacted in 1986, this anti-retaliation statute is known as New Jersey’s Whistleblower’s Act. The goal of the CEPA is to encourage whistleblowers to report wrongdoing to their employers without fear of reprisals. Overall, CEPA provides a broader range of protections and remedies than other similar statutes, such as the federal False Claims Act.

Whistleblower activity for SEC violations on the rise

The U.S. Senate reports that more than half of all uncovered frauds have originated from whistleblower tips. Since the SEC’s Office of the Whistleblower was launched in August 2011, officials have been dealing with close to 100 tips per day. And this number is expected to double in the coming years with Dodd-Frank’s provisions for monetary incentives and protection from retaliation.

While coming to grips with the complexities of Dodd-Frank, many companies and financial institutions are heightening their efforts to mitigate the potential liability from whistleblowing. Developing and evaluating existing risk management and compliance programs is now a priority. The programs established under the 2002 Sarbanes-Oxley Act may not be effective in this new regulatory environment, and may need to be modified or strengthened, with an emphasis on internal communications and investigations of possible violations. When determining if and how much leniency to grant an entity, the SEC notes that “the promptness with which entities voluntarily self-report their misconduct…is an important factor.”

According to a recent study published by the Association of Certified Fraud Examiners and the Institute of Internal Auditors, fraudulent acts by employees and outsiders rise during periods of economic stress. Crime experts say that fraud and other misconduct are committed primarily because of three factors, referred to as the Fraud Triangle, and involve financial pressure, opportunity, and rationalization. In these still challenging times, businesses of all types and sizes need to tighten their internal controls and be proactive in preventing wrongful acts. Allocating budgets for compliance programs which include compelling due diligence with a focus on background investigations, will provide a high return on the investment and ultimately protect the bottom line.
March 2nd, 2012|Dodd-Frank, Violations|
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