The Exchange Act 15 U.S.C. 78u-6 defines a whistleblower as “an individual who provides, or 2 or more individuals acting jointly who provide, information relating to a violation of the securities laws to the Commission, in a manner established, by rule or regulation, by the Commission.” Section 6(h)(1) states that “No employer may discharge, demote, suspend, threaten, harass, directly or indirectly, or in any other manner discriminate against, a whistleblower in the terms and conditions of employment because of any lawful act done by the whistleblower.” The Securities and Exchange Commission Regulation 21F 240.21 outlines the guidelines by which whistleblowers can submit information to the SEC regarding violations and be classified as a whistleblower thereby entitling them to all the rights, privileges, and rewards thereof. Regulation 21F 240.21F-9 states that “to be considered a whistleblower under Section 21F of the exchange act, you must submit your information about a possible securities law violation by either of these methods: (1) Online, through the Commission’s website located at www.sec.gov; or (2) By mailing or faxing a Form TCR (Tip, Complaint, or Referral) to the SEC Office of the Whistleblower”.
The Whistleblower policy is intended, not to prevent employees from whistleblowing on their employer, but to ensure that the employee attempting to distribute such information is allowed to do so through the proper channels to ensure that they are eligible for all legal rights granted to whistleblowers. The policy looks for a possible whistleblower situation and allows an organization to take appropriate steps in response to this information.
The Whistleblower trigger works by scanning electronic communications for language that may indicate the individual’s intention to whistle blow, such as “They are lying to the regulators”, “Violating NASD Rule 2030”, or “The information that I bring is unethical and is in direct violation of NASD regulations”. When a customer-determined threshold of matches is reached, the trigger fires and flags the event for further review to determine the level of severity.