“Nut jobs.” That single, derisive term uttered at a conference in Chicago in early December by a prominent executive in the financial industry has set back the work of internal compliance officials and affirmed the fears of many whistleblowers.

Kathleen Cronin, senior managing director and general counsel of futures and options exchange CME Group, told conference attendees that most complaints about compliance come from “nut jobs,” according to Crain’s Chicago Business.

Cronin’s dismissive characterization of whistleblowers was a stunner. Her attitude toward employees who raise compliance concerns does make one wonder how seriously the internal compliance program that she oversees at CME takes whistleblower complaints.

Equally alarming is that Cronin’s remarks cannot be dismissed as intemperate comments caught on a “hot mic.” She was offering expert insight at a public forum to other lawyers about “hot topics” in the securities and commodities field.

I would like to believe that Cronin is an outlier in the world of corporate compliance. But based on the experience of many of my whistleblower clients, she succinctly summed up the attitude that many employees face when they report corporate wrongdoing internally.

After nearly 30 years of highly effective government whistleblower programs—starting with the one created by the amended False Claims Act in 1986 and continuing through to the Dodd-Frank Act whistleblower programs established in 2010—corporate executives should recognize that attitudes like Cronin’s are out of step with the views of regulators and enforcement officials who regard whistleblowers as vital to advancing federal fraud enforcement priorities. Whistleblowers are not going away and cannot be blown off as “nut jobs.”

Whistleblowers overwhelmingly report internally first for a simple reason: They want to work in an ethical workplace, and they want wrongdoing stopped and corrected.

Cronin was also wrong on another point: As reported by Crain’s, Cronin claimed that whistleblower programs incentivize "disgruntled" employees to bypass corporate compliance programs and go straight to the Securities and Exchange Commission and Commodity Futures Trading Commission to report wrongdoing.

The SEC Whistleblower Office said in its latest annual report that roughly 80 percent of the whistleblowers who received SEC awards “raised their concerns internally to their supervisors or compliance personnel, or understood that their supervisor or relevant compliance personnel knew of the violations, before reporting their information of wrongdoing to the Commission.”

On a broader scale, the Ethics Resource Center found in a survey that more than nine out of ten employees (92 percent) turn to somebody inside the company to raise their concerns about improper business practices.

Whistleblowers overwhelmingly report internally first for a simple reason: They want to work in an ethical workplace, and they want wrongdoing stopped and corrected.

It is when employees are faced with compliance officers like Cronin, and their concerns are ignored or they are treated as “nut jobs,” that they are left with no alternative but to report the matters to government enforcement agencies.

Legal and compliance officers should not make Cronin’s mistake. They should be ensuring a consistent message from the top down that strong compliance is valued and that employees can trust internal compliance staff to take their concerns seriously without fear of retaliation. Employees who care enough about their companies to try to work internally to get problems corrected should be treated with respect—not ridiculed or insulted, whether publicly or privately.

Shame on those whose attitudes undermine the efforts of others who wish to build effective internal compliance functions.

 

Erika Kelton is an attorney with Phillips & Cohen LLP and has substantial experience representing both U.S. and international whistleblowers in cases involving fraud against the U.S. government and those involving claims brought under whistleblower reward programs with the U.S. Securities and Exchange Commission, the Commodity Futures Trading Commission, and the Internal Revenue Service, including Foreign Corrupt Practices Act violations.

Topics