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Foley & Lardner: Whistleblower Action Items for Advisers and Funds

Reacting to the SEC's recent adoption of whistleblower rules, the Foley & Lardner law firm has published a short list of recommended action items for funds and investment advisers to deal effectively with the new rules.  As part of their oversight duties with regard to their funds' and advisers' compliance funtions, fund directors may wish to inquire about steps their funds' advisers have taken to address these new rules.  

Action Items for Investment Advisers and Investment Companies

Investment advisers and investment companies should take the following actions to minimize exposure and encourage internal dialogue under the new rules. Review and update compliance policies and procedures to ensure that they:

  • Affirmatively require employees and outside consultants to report violations internally through corporate compliance programs first
  • Articulate a clear anti-retaliation policy
  • Impose express time limits for internal investigations, in an effort to self-report (where necessary) in a timely fashion
  • Detail the process for determining whether to self-report, and the documentation required to support this determination
  • Cultivate a culture that emphasizes the importance of legal and regulatory compliance and ethical conduct
  • Ensure that the compliance program has appropriate oversight at the board level
  • Offer training on the whistleblower policy and procedures so that employees know the process and appreciate the roles of the people involved
  • Ensure that all employees understand that retaliation for reporting legitimate concerns of potential misconduct will not be tolerated
  • Investigate and evaluate whistleblower complaints expeditiously

If you learn your company has no exposure or a rogue whistleblower is off track, request a proactive meeting with the government to inform the SEC that there are two sides to the allegations.

If you learn of a complaint, ask the SEC for an opportunity to formally respond before making a decision whether to accept the whistleblower's referral.

The full text of th Foley & Larner newsletter is available at:  http://www.foley.com/publications/pub_detail.aspx?pubid=8213