Corporate Security Archives - The National Law Forum

Unlike a Fine Wine, Tax Issues Do Not Get Better with Age

In a recent decision, the New York State Tax Appeals Tribunal (“Tribunal”) upheld notices of deficiency issued by the New York State Department of Taxation and Finance (the “Department”) totaling approximately $15 million in additional tax, plus interest and penalties for tax years dating as far back as 2002. In the Matter of the Petition of Cushlin Limited, DTA No. 829939 (TAT Oct. 10, 2024). The notices of deficiency came on the heels of an audit that lasted a decade and at the end of which the Department computed additional corporation franchise tax due “based on the information it had available” inasmuch as the information provided by the company over the 10-year audit was “incomplete and/or unsubstantiated.” This case is a cautionary tale for taxpayers and a reminder that tax issues do not get better with age, and delaying or putting off addressing known issues only makes the situation worse in the end.

The company was a corporation organized under the laws of The Isle of Man and was in the business of acquiring and refurbishing three- and four-star hotels. The company also owned equity interests in 13 limited liability companies (“LLCs”) that were doing business in New York. In 2008, the Department began an audit of one of the LLCs and discovered that it had sold real property in New York but did not file a New York State partnership tax return. As a result of its ownership interest in the LLCs, the Department determined that the company was required to file New York corporation franchise tax returns on which it was required to report the gains and losses of the LLCs. The audit of the company initially covered the tax years 2002 through 2006 and was later expanded to include 2007 through 2009.

From 2010 through 2013, the company and the Department communicated multiple times, and the company repeatedly stated that it was preparing tax returns for the audit years for the LLCs and the company and that it required more time to prepare those returns. In 2013, the company provided the Department with draft tax returns for the company and the LLCs. In May 2016, after another three years passed without final tax returns being filed, the Department informed the company that it was assessing additional corporation franchise tax computed based on the amounts in the draft returns plus interest and penalties. In June 2016, the company filed final tax returns for all of the audit years, and the final returns reflected income and deductions that were larger than the amounts previously included in the draft returns.

The Department then issued three information document requests over the next two years that requested information substantiating the deductions claimed on the filed returns. In response to these requests, the Tribunal found that the company “provided only partial responses that lacked any externally verifiable substantiation” and repeated Department requests were “met with partial, inconclusive responses.” Finally, in 2018, the Department issued the notices of deficiency that assessed the amount of additional corporation franchise tax that the Department had previously computed using the company’s draft returns plus updated additional interest and penalties. The company appealed and the Administrative Law Judge (“ALJ”) sustained the notices finding: (1) that the company had failed to meet its burden of proving that the notices were incorrect; and (2) that penalties were properly imposed as the company also failed to demonstrate that its failure to file timely returns was a result of reasonable cause and not willful neglect.

The Tribunal agreed with the ALJ, concluding that there was a rational basis for the notices because “[w]orking without returns or supporting documentation more than six years after it began, the [Department] used the available information provided by petitioner, verified by other information contained in the [Department’s] own database, to arrive at a computation of tax due from petitioner.” Moreover, the Tribunal reasoned, the Department provided the company with numerous opportunities to substantiate the amounts that the company reported on its filed returns and the company’s failure to provide substantiating information left the Department with “little choice” but to “use another method to arrive at a determination of tax liability.” Finally, the Tribunal concluded that the ALJ correctly determined that penalties were properly imposed as the company did not meet its burden to demonstrate reasonable cause.

Shorter Path to Green Card: New USCIS Guidance for EB-1 Eligibility for Foreign Nationals With Extraordinary Ability

For foreign nationals with “extraordinary ability” in the sciences, arts, education, business or athletics, the path to a green card normally has a much shorter route. The EB-1 extraordinary ability category is a type of employment-based, first-preference visa that has several advantages for a “small percentage of individuals” positioned to prove their expertise within a specific area. As indicated by the elite immigrant visa category, an extraordinary amount of documentation is required to meet the high threshold for EB-1 eligibility.

To provide an example of the evidentiary criteria, this category reserved for individuals with extraordinary ability requires that individuals demonstrate extraordinary ability through sustained national or international acclaim. To do so, applicants must meet at least three of the 10 criteria, or provide evidence of a major one-time achievement, such as a Pulitzer Prize, Oscar, or Olympic medal. In addition, applicants must provide evidence showing that they will continue to work in the area of expertise.

More specifically, the applicant must provide evidence of at least three of the following:

Receipt of lesser nationally or internationally recognized prizes or awards for excellence
Membership in associations in the field which demand outstanding achievement of their members
Published material about the candidate in professional or major trade publications or other major media
Judgment of the work of others, either individually or on a panel
Original scientific, scholarly, artistic, athletic, or business-related contributions of major significance to the field
Authorship of scholarly articles in professional or major trade publications or other major media
Display of work at artistic exhibitions or showcases
Performance of a leading or critical role in distinguished organizations
Command of a high salary or other significantly high remuneration in relation to others in the field
Commercial successes in the performing arts

While U.S. Citizenship and Immigration Services (USCIS) has been consistent in detailing the criteria to be demonstrated, the specific evidence deemed acceptable has evolved over the lifetime of this visa category. Last September, USCIS updated its policy manual on employment-based first-preference (EB-1) immigrant petitions in the Extraordinary Ability classification. Specifically, USCIS provided examples of comparable evidence and the way in which USCIS will “consider any potentially relevant evidence.”

To further clarify the acceptable types of evidence, USCIS issued another policy manual update on Oct. 2. The most recent update provided additional clarification, stating:

“Confirms that we consider a person’s receipt of team awards under the criterion for lesser nationally or internationally recognized prizes or awards for excellence in the field of endeavor;
Clarifies that we consider past memberships under the membership criterion;
Removes language suggesting published material must demonstrate the value of the person’s work and contributions to satisfy the published material criterion; and
Explains that while the dictionary defines an “exhibition” as a public showing not limited to art, the relevant regulation expressly modifies that term with “artistic,” such that we will only consider non-artistic exhibitions as part of a properly supported claim of comparable evidence.”

These clarifications likely will provide more consistency in the adjudication process.

This article was co-authored by Tieranny Cutler, independent contract attorney.

Supreme Court Holds Life Insurance Proceeds Paid to Closely-Held Corporation to Fund Buy-Sell Agreement Increases Estate Tax on Deceased Shareholder’s Estate

In Connelly v. U.S., 144 S.Ct. 1406 (June 6, 2024), the United States Supreme Court upheld an estate tax deficiency of $889,914 in a decision that will impact many families and closely-held businesses. A Buy-Sell Agreement is often used to ensure that a closely-held company will remain within the family after the deaths of its owners or otherwise ensure the continuity of the business after an owner’s death. Many Buy-Sell Agreements, such as the one in Connelly, provide that upon the death of an owner, the surviving owner has the option to purchase the deceased owner’s interest in the company, and if the surviving owner declines, the company must redeem the deceased owner’s interest. To ensure that the company will have funds for the redemption, the company will often obtain life insurance for its owners. For years, planners thought it possible to structure such an arrangement so that life insurance proceeds would not increase the value of the company for estate tax purposes. However, in Connelly, the Court held that the life insurance proceeds paid to a corporation upon the death of a shareholder do increase the value of the corporation’s stock for estate tax purposes and that the corporation’s obligation under a Buy-Sell Agreement to redeem the deceased shareholder’s shares does not offset the life insurance proceeds. Under the Court’s decision, the type of entity does not appear to be relevant, and the holding will equally apply to partnerships and limited liability companies. Thus, if any Buy-Sell Agreement is structured as a redemption funded with entity-owned life insurance, the insurance proceeds may increase the value of the deceased business owner’s interest for estate tax purposes.

In Connelly, two brothers, Michael and Thomas Connelly, owned a business supply corporation. Michael owned 77.18% of the company, and Thomas owned 22.82% of the company. The brothers entered into a Buy-Sell Agreement as described above. The brothers ignored provisions under the agreement that required them to value the company annually and obtain an appraisal upon a shareholder’s death. After Michael’s death in 2013, Thomas and Michael’s son simply agreed to a redemption price of $3 million for Michael’s shares. The company used $3 million of life insurance proceeds to redeem Michael’s shares, and Thomas, as Michael’s executor, reported the value of Michael’s shares as $3 million on Michael’s estate tax return without completing an appraisal. Upon audit of the estate tax return, Thomas belatedly obtained an appraisal that determined the fair market value of 100% of the company at Michael’s death to be $3.86 million, excluding the life insurance proceeds. Based on the valuation of the company at $3.86 million, Thomas argued that the value of Michael’s ownership interest was $3 million ($3.86 million x 77.18%).

Connelly rejects the position of the 11^th Circuit Court of Appeals in Blount v. Comm’r., 428 F. 3d 1338 (CA11 2005), that the life insurance proceeds paid to a company are offset by the company’s contractual obligation to redeem a deceased owner’s interest. Rather than allowing an offset for the redemption obligation, the Court focused on the value of the company before and after the redemption. If the entire company was worth $3.86 million, as claimed in Connelly, the value of Michael’s 77.18% would be $3 million and the value of Thomas’ 22.82% would be $860,000. The Court reasoned that upon redemption of Michael’s shares, Michael’s estate would receive $3 million, leaving Thomas with 100% ownership of a company worth $860,000. However, Thomas’ argument meant that post-redemption, 100% of the company that Thomas owned was worth $3.86 million. The Court refused to accept that a company which pays out $3 million to redeem shares was worth the same overall amount before and after the redemption. The Court found that the company’s value should be increased from $3.86 to $6.86 million, accounting for the insurance proceeds, increasing the value of Michael’s ownership from $3 to approximately $5.3 million ($6.86 million × 77.18%). The net result was an additional estate tax of $889,914.

Although the implications of Connelly are wide, there are limitations to the Court’s decision. Connelly will have little impact on a business owner whose estate is well under the estate tax exemption, which is currently $13.61 million for each individual and scheduled to be decreased by 50% in 2026. In addition, the Court did not address the application of Section 2703 of the Internal Revenue Code, which provides in relevant part that the value of a deceased owner’s interest in a business may be established by a Buy-Sell Agreement if certain requirements are met. Perhaps the Court did not review Section 2703 because the shareholders did not follow the valuation terms of the Buy-Sell Agreement and arbitrarily determined the redemption price instead. But because Section 2703 was not addressed in Connelly, it may yet be possible to avoid its impact with a properly structured and adhered to, Buy-Sell Agreement.

The Court also explicitly stated in a footnote that the holding does not mean that a redemption obligation can never decrease a corporation’s value. The Court implies that if a company is required to sell an operating asset to redeem shares, the redemption obligation might reduce the company’s value.

The Court acknowledged that a differently structured Buy-Sell Agreement can avoid the risk that insurance proceeds would increase the value of a deceased shareholder’s shares. Specifically, the Court referenced a “cross-purchase agreement” in which business owners, rather than the company, agree to purchase the others’ ownership upon death using proceeds from non-company owned policies. In addition to avoiding the Connelly result, a cross-purchase agreement provides an increased tax basis for the surviving owners who purchase a deceased owner’s interests. However, the more owners a business has, the more complicated a life insurance-funded cross-purchase will be. Other options to avoid the Connelly result may include a life insurance partnership or limited liability company or creatively structured split-dollar arrangements.

After Connelly, all business owners with Buy-Sell Agreements funded with entity-owned life insurance, or with other entity-owned insurance vehicles (split-dollar plans, key-person life insurance, etc.) should evaluate and consider restructuring their arrangements. In some cases, the restructuring of a Buy-Sell Agreement may require the transfer of life insurance policies which raises other tax issues, such as in-kind corporate distributions, S corporation elections, transfer-for-value rules, and incidents of ownership.

The Double-Edged Impact of AI Compliance Algorithms on Whistleblowing

As the implementation of Artificial Intelligence (AI) compliance and fraud detection algorithms within corporations and financial institutions continues to grow, it is crucial to consider how this technology has a twofold effect.

It’s a classic double-edged technology: in the right hands it can help detect fraud and bolster compliance, but in the wrong it can snuff out would-be-whistleblowers and weaken accountability mechanisms. Employees should assume it is being used in a wide range of ways.

Algorithms are already pervasive in our legal and governmental systems: the Securities and Exchange Commission, a champion of whistleblowers, employs these very compliance algorithms to detect trading misconduct and determine whether a legal violation has taken place.

There are two major downsides to the implementation of compliance algorithms that experts foresee: institutions avoiding culpability and tracking whistleblowers. AI can uncover fraud but cannot guarantee the proper reporting of it. This same technology can be used against employees to monitor and detect signs of whistleblowing.

Strengths of AI Compliance Systems:

AI excels at analyzing vast amounts of data to identify fraudulent transactions and patterns that might escape human detection, allowing institutions to quickly and efficiently spot misconduct that would otherwise remain undetected.

AI compliance algorithms are promised to operate as follows:

Real-time Detection: AI can analyze vast amounts of data, including financial transactions, communication logs, and travel records, in real-time. This allows for immediate identification of anomalies that might indicate fraudulent activity.
Pattern Recognition: AI excels at finding hidden patterns, analyzing spending habits, communication patterns, and connections between seemingly unrelated entities to flag potential conflicts of interest, unusual transactions, or suspicious interactions.
Efficiency and Automation: AI can automate data collection and analysis, leading to quicker identification and investigation of potential fraud cases.

Yuktesh Kashyap, associate Vice President of data science at Sigmoid explains on TechTarget that AI allows financial institutions, for example, to “streamline compliance processes and improve productivity. Thanks to its ability to process massive data logs and deliver meaningful insights, AI can give financial institutions a competitive advantage with real-time updates for simpler compliance management… AI technologies greatly reduce workloads and dramatically cut costs for financial institutions by enabling compliance to be more efficient and effective. These institutions can then achieve more than just compliance with the law by actually creating value with increased profits.”

Due Diligence and Human Oversight

Stephen M. Kohn, founding partner of Kohn, Kohn & Colapinto LLP, argues that AI compliance algorithms will be an ineffective tool that allow institutions to escape liability. He worries that corporations and financial institutions will implement AI systems and evade enforcement action by calling it due diligence.

“Companies want to use AI software to show the government that they are complying reasonably. Corporations and financial institutions will tell the government that they use sophisticated algorithms, and it did not detect all that money laundering, so you should not sanction us because we did due diligence.” He insists that the U.S. Government should not allow these algorithms to be used as a regulatory benchmark.

Legal scholar Sonia Katyal writes in her piece “Democracy & Distrust in an Era of Artificial Intelligence” that “While automation lowers the cost of decision making, it also raises significant due process concerns, involving a lack of notice and the opportunity to challenge the decision.”

While AI can be used as a powerful tool for identifying fraud, there is still no method for it to contact authorities with its discoveries. Compliance personnel are still required to blow the whistle, given societies standard due process. These algorithms should be used in conjunction with human judgment to determine compliance or lack thereof. Due process is needed so that individuals can understand the reasoning behind algorithmic determinations.

The Double-Edged Sword

Darrell West, Senior Fellow at Brookings Institute’s Center for Technology Innovation and Douglas Dillon Chair in Governmental Studies warns about the dangerous ways these same algorithms can be used to find whistleblowers and silence them.

Nowadays most office jobs (whether remote or in person) conduct operations fully online. Employees are required to use company computers and networks to do their jobs. Data generated by each employee passes through these devices and networks. Meaning, your privacy rights are questionable.

Because of this, whistleblowing will get much harder – organizations can employ the technology they initially implemented to catch fraud to instead catch whistleblowers. They can monitor employees via the capabilities built into our everyday tech: cameras, emails, keystroke detectors, online activity logs, what is downloaded, and more. West urges people to operate under the assumption that employers are monitoring their online activity.

These techniques have been implemented in the workplace for years, but AI automates tracking mechanisms. AI gives organizations more systematic tools to detect internal problems.

West explains, “All organizations are sensitive to a disgruntled employee who might take information outside the organization, especially if somebody’s dealing with confidential information, budget information or other types of financial information. It is just easy for organizations to monitor that because they can mine emails. They can analyze text messages; they can see who you are calling. Companies could have keystroke detectors and see what you are typing. Since many of us are doing our jobs in Microsoft Teams meetings and other video conferencing, there is a camera that records and transcribes information.”

If a company is defining a whistleblower as a problem, they can monitor this very information and look for keywords that would indicate somebody is engaging in whistleblowing.

With AI, companies can monitor specific employees they might find problematic (such as a whistleblower) and all the information they produce, including the keywords that might indicate fraud. Creators of these algorithms promise that soon their products will be able to detect all sorts of patterns and feelings, such as emotion and sentiment.

AI cannot determine whether somebody is a whistleblower, but it can flag unusual patterns and refer those patterns to compliance analysts. AI then becomes a tool to monitor what is going on within the organization, making it difficult for whistleblowers to go unnoticed. The risk of being caught by internal compliance software will be much greater.

“The only way people could report under these technological systems would be to go offline, using their personal devices or burner phones. But it is difficult to operate whistleblowing this way and makes it difficult to transmit confidential information. A whistleblower must, at some point, download information. Since you will be doing that on a company network, and that is easily detected these days.”

But the question of what becomes of the whistleblower is based on whether the compliance officers operate in support of the company or the public interest – they will have an extraordinary amount of information about the company and the whistleblower.

Risks for whistleblowers have gone up as AI has evolved because it is harder for them to collect and report information on fraud and compliance without being discovered by the organization.

West describes how organizations do not have a choice whether or not to use AI anymore: “All of the major companies are building it into their products. Google, Microsoft, Apple, and so on. A company does not even have to decide to use it: it is already being used. It’s a question of whether they avail themselves of the results of what’s already in their programs.”

“There probably are many companies that are not set up to use all the information that is at their disposal because it does take a little bit of expertise to understand data analytics. But this is just a short-term barrier, like organizations are going to solve that problem quickly.”

West recommends that organizations should just be a lot more transparent about their use of these tools. They should inform their employees what kind of information they are using, how they are monitoring employees, and what kind of software they use. Are they using detection? Software of any sort? Are they monitoring keystrokes?

Employees should want to know how long information is being stored. Organizations might legitimately use this technology for fraud detection, which might be a good argument to collect information, but it does not mean they should keep that information for five years. Once they have used the information and determined whether employees are committing fraud, there is no reason to keep it. Companies are largely not transparent about length of storage and what is done with this data and once it is used.

West believes that currently, most companies are not actually informing employees of how their information is being kept and how the new digital tools are being utilized.

The Importance of Whistleblower Programs:

The ability of AI algorithms to track whistleblowers poses a real risk to regulatory compliance given the massive importance of whistleblower programs in the United States’ enforcement of corporate crime.

The whistleblower programs at the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) respond to individuals who voluntarily report original information about fraud or misconduct.

If a tip leads to a successful enforcement action, the whistleblowers are entitled to 10-30% of the recovered funds. These programs have created clear anti-retaliation protections and strong financial incentives for reporting securities and commodities fraud.

Established in 2010 under the Dodd-Frank Act, these programs have been integral to enforcement. The SEC reports that whistleblower tips have led to over $6 billion in sanctions while the CFTC states that almost a third of its investigations stem from whistleblower disclosures.

Whistleblower programs, with robust protections for those who speak out, remain essential for exposing fraud and holding organizations accountable. This ensures that detected fraud is not only identified, but also reported and addressed, protecting taxpayer money, and promoting ethical business practices.

If AI algorithms are used to track down whistleblowers, their implementation would hinder these programs. Companies will undoubtedly retaliate against employees they suspect of blowing the whistle, creating a massive chilling effect where potential whistleblowers would not act out of fear of detection.

Already being employed in our institutions, experts believe these AI-driven compliance systems must have independent oversight for transparency’s sake. The software must also be designed to adhere to due process standards.

For more news on AI Compliance and Whistleblowing, visit the NLR Communications, Media & Internet section.

The Imperatives of AI Governance

If your enterprise doesn’t yet have a policy, it needs one. We explain here why having a governance policy is a best practice and the key issues that policy should address.

Why adopt an AI governance policy?

AI has problems.

AI is good at some things, and bad at other things. What other technology is linked to having “hallucinations”? Or, as Sam Altman, CEO of OpenAI, recently commented, it’s possible to imagine “where we just have these systems out in society and through no particular ill intention, things just go horribly wrong.”

If that isn’t a red flag…

AI can collect and summarize myriad information sources at breathtaking speed. Its ability to reason from or evaluate that information, however, consistent with societal and governmental values and norms, is almost non-existent. It is a tool – not a substitute for human judgment and empathy.

Some critical concerns are:

Are AI’s outputs accurate? How precise are they?
Does it use PII, biometric, confidential, or proprietary data appropriately?
Does it comply with applicable data privacy laws and best practices?
Does it mitigate the risks of bias, whether societal or developer-driven?

AI is a frontier technology.

AI is a transformative, foundational technology evolving faster than its creators, government agencies, courts, investors and consumers can anticipate.

In other words, there are relatively few rules governing AI—and those that have been adopted are probably out of date. You need to go above and beyond regulatory compliance and create your own rules and guidelines.

And the capabilities of AI tools are not always foreseeable.

Hundreds of companies are releasing AI tools without fully understanding the functionality, potential and reach of these tools. In fact, this is somewhat intentional: at some level, AI’s promise – and danger – is its ability to learn or “evolve” to varying degrees, without human intervention or supervision.

AI tools are readily available.

Your employees have access to AI tools, regardless of whether you’ve adopted those tools at an enterprise level. Ignoring AI’s omnipresence, and employees’ inherent curiosity and desire to be more efficient, creates an enterprise level risk.

Your customers and stakeholders demand transparency.

The policy is a critical part of building trust with your stakeholders.

Your customers likely have two categories of questions:

How are you mitigating the risks of using AI? And, in particular, what are you doing with my data?

And

Will AI benefit me – by lowering the price you charge me? By enhancing your service or product? Does it truly serve my needs?

Your board, investors and leadership team want similar clarity and direction.

True transparency includes explainability: At a minimum, commit to disclose what AI technology you are using, what data is being used, and how the deliverables or outputs are being generated.

What are the key elements of AI governance?

Any AI governance policy should be tailored to your institutional values and business goals. Crafting the policy requires asking some fundamental questions and then delineating clear standards and guidelines to your workforce and stakeholders.

1. The policy is a “living” document, not a one and done task.

Adopt a policy, and then re-evaluate it at least semi-annually, or even more often. AI governance will not be a static challenge: It requires continuing consideration as the technology evolves, as your business uses of AI evolve, and as legal compliance directives evolve.

2. Commit to transparency and explainability.

What is AI? Start there.

Then,

What AI are you using? Are you developing your own AI tools, or using tools created by others?

Why are you using it?

What data does it use? Are you using your own datasets, or the datasets of others?

What outputs and outcomes is your AI intended to deliver?

3. Check the legal compliance box.

At a minimum, use the policy to communicate to stakeholders what you are doing to comply with applicable laws and regulations.

Update the existing policies you have in place addressing data privacy and cyber risk issues to address AI risks.

The EU recently adopted its Artificial Intelligence Act, the world’s first comprehensive AI legislation. The White House has issued AI directives to dozens of federal agencies. Depending on the industry, you may already be subject to SEC, FTC, USPTO, or other regulatory oversight.

And keeping current will require frequent diligence: The technology is rapidly changing even while the regulatory landscape is evolving weekly.

4. Establish accountability.

Who within your company is “in charge of” AI? Who will be accountable for the creation, use and end products of AI tools?

Who will manage AI vendor relationships? Is their clarity as to what risks will be borne by you, and what risks your AI vendors will own?

What is your process for approving, testing and auditing AI?

Who is authorized to use AI? What AI tools are different categories of employees authorized to use?

What systems are in place to monitor AI development and use? To track compliance with your AI policies?

What controls will ensure that the use of AI is effective, while avoiding cyber risks and vulnerabilities, or societal biases and discrimination?

5. Embrace human oversight as essential.

Again, building trust is key.

The adoption of a frontier, possibly hallucinatory technology is not a build it, get it running, and then step back process.

Accountability, verifiability, and compliance require hands on ownership and management.

If nothing else, ensure that your AI governance policy conveys this essential.

The ‘Effective Spread’ of Order Execution Quality Reporting

On March 6, 2024, by unanimous vote, the Securities and Exchange Commission (SEC) adopted changes to Rule 605 under Regulation NMS, the provision that previously required only entities defined as “market centers” to publish detailed statistics on the quality of execution of “covered orders” in NMS stocks. Amended Rule 605 expands the reporting requirement in many ways:

by reporting party, to (a) broker-dealers with over 100,000 customer accounts (not just “market centers”); (b) Single Dealer Platforms; and (c) Automated Trading Systems (as a stand-alone reporter, separate from any reports by the broker-dealer operator the ATS);
by expanding the scope of “covered orders” to include: (a) non-marketable limit orders received outside market hours and executed during market hours; (b) stop orders; and (c) short sale orders not marked short exempt and not subject to price test restrictions under Reg SHO.
by revising time and size categories to include odd-lot and fractional share orders and measure execution time in microseconds and milliseconds. Timestamps must also contain millisecond granularity.
by expanding execution quality metrics. This expansion is wide-ranging and, among other things, (a) adds effective over quoted spread (“E/Q”) as a reporting metric; (b) requires reporting of average realized spread at multiple periods from 50 milliseconds to five minutes after execution; (c) measures price improvement not only relative to the NBBO, but also relative to the “best available displayed price,” a new baseline that includes available odd-lot liquidity; (d) adds measures of size improvement; and (e) includes fill rate information for non-marketable limit orders.

In the past, Rule 605 reports were practically unreadable for retail investors. They were data-heavy rather than in “plain English” and were reported at the security level, requiring significant data analysis to draw meaningful conclusions. The revised Rule seeks to remedy this deficiency, requiring covered broker-dealers and market centers to provide a Summary Report broken out by S&P 500 and non-S&P 500 securities, by order type (market and marketable limit) and order size, with columns for: average order size (shares and notional), average midpoint, percentage of orders executed at the quote or better, percentage receiving price improvement (both absolute and as a percentage of midpoint); average effective spread; average quoted spread; average effective over quoted spread (or “E/Q” percentage); average realized spread 15 seconds and one minute after execution; and average execution speed, in milliseconds.

While the rule revisions are comprehensive and will require significant programming (or vendor) expense, particularly for broker-dealers newly subject to the rule, many of the changes are welcome. Rule 605 had previously been subject to many increasingly outdated metrics, and firms that route orders will welcome more comprehensive and granular data elements. It remains to be seen whether retail and institutional customers will use the data to demand better execution quality from their broker-dealers or manage order-entry decisions based on the data.

What is meaningful, however, is the timing of this rule revision. These revisions were proposed in December 2022 as part of a package of significant market structure changes, including a proposed Order Competition Rule, a proposed far-reaching SEC best execution requirement known as Regulation Best Execution, and proposals to revise the pricing increments for quoting and trading equity securities and the minimum fees to access that liquidity. These other proposals were very controversial and subject to strong pushback from many parts of the securities industry. Many argued that the SEC should first adopt the proposed amendments to Rule 605 and then use the data from revised Rule 605 reporting to evaluate the other rule proposals. This approach would, of course, delay consideration of the other rule proposals while data were generated under revised Rule 605. The SEC’s adoption of just the Rule 605 revisions does not preclude further consideration of the other rules, but it is a welcome development and a step in the right direction.

The Rule 605 amendments will become effective 60 days after the release is published in the Federal Register. The compliance date is currently set for 18 months after that effective date.

For more news on SEC Regulations, visit the NLR Securities & SEC section.

An Update on the SEC’s Cybersecurity Reporting Rules

As we pass the two-month anniversary of the effectiveness of the U.S. Securities and Exchange Commission’s (“SEC’s”) Form 8-K cybersecurity reporting rules under new Item 1.05, this blog post provides a high-level summary of the filings made to date.

Six companies have now made Item 1.05 Form 8-K filings. Three of these companies also have amended their first Form 8-K filings to provide additional detail regarding subsequent events. The remainder of the filings seem self-contained such that no amendment is necessary, but these companies may amend at a later date. In general, the descriptions of the cybersecurity incidents have been written at a high level and track the requirements of the new rules without much elaboration. It is interesting, but perhaps coincidental, that the filings seem limited to two broad industry groups: technology and financial services. In particular, two of the companies are bank holding companies.

Although several companies have now made reports under the new rules, the sample space may still be too small to draw any firm conclusions or decree what is “market.” That said, several of the companies that have filed an 8-K under Item 1.05 have described incidents and circumstances that do not seem to be financially material to the particular companies. We are aware of companies that have made materiality determinations in the past on the basis of non-financial qualitative factors when impacts of a cyber incident are otherwise quantitatively immaterial, but these situations are more the exception than the rule.

There is also a great deal of variability among the forward-looking statement disclaimers that the companies have included in the filings in terms of specificity and detail. Such a disclaimer is not required in a Form 8-K, but every company to file under Item 1.05 to date has included one. We believe this practice will continue.

Since the effectiveness of the new rules, a handful of companies have filed Form 8-K filings to describe cybersecurity incidents under Item 8.01 (“Other Events”) instead of Item 1.05. These filings have approximated the detail of what is required under Item 1.05. It is not immediately evident why these companies chose Item 8.01, but presumably the companies determined that the events were immaterial such that no filing under Item 1.05 was necessary at the time of filing. Of course, the SEC filing is one piece of a much larger puzzle when a company is working through a cyber incident and related remediation. It remains to be seen how widespread this practice will become. To date, the SEC staff has not publicly released any comment letters critiquing any Form 8-K cyber filing under the new rules, but it is still early in the process. The SEC staff usually (but not always) makes its comment letters and company responses to those comment letters public on the SEC’s EDGAR website no sooner than 20 business days after it has completed its review. With many public companies now also making the new Form 10-K disclosure on cybersecurity, we anticipate the staff will be active in providing guidance and commentary on cybersecurity disclosures in the coming year.

Becoming Antitrust Aware in 2024: Top Five Recommendations for the New Year

A new year means resolutions which are often centered around self-improvement measures like weight loss, exercise plans, and other health improvement measures. Companies can also benefit from resolutions. Increasing antitrust awareness is not usually on the resolution list but here we offer some ideas for companies as they embark on a new year.

Treat antitrust as a priority in 2024.

As antitrust lawyers, our viewpoint may be biased, and we certainly appreciate that most companies already have a lengthy list of priorities for their in-house and outside legal teams. Given that all companies, regardless of their size, are subject to the antitrust laws, and given the high stakes involved (including criminal penalties and treble damages awards), antitrust certainly deserves to be on the priority list. One relatively easy way to get the ball rolling is to put fresh eyes on your company’s antitrust policy. When was the last time it was updated? What type of trainings does your company use to teach the concepts contained in the policy? The training doesn’t need to be – and shouldn’t be – boring or esoteric. Instead, trainings should be engaging and tailored to the specific antitrust risks that workgroups may face. For example, the sales team will need different antitrust training than those working on supply chain or environmental, social, and governance (ESG) initiatives. Ask your antitrust lawyer to create easy-to-follow, lively online trainings that can be viewed on demand. And if your company doesn’t have an antitrust policy, we suggest that creating one be moved to the top (or near top) of the legal department’s to-do list in 2024.

Understand the current antitrust enforcement priorities.

2024 will be a significant year for antitrust. It’s an election year, which means 2024 may be the Biden Administration’s last year to execute on plans that have been in the works since President Biden issued Executive Order 14036, “Promoting Competition in the American Economy,” in July 2021. Some of the Administration’s more dramatic plans include significant revisions to the Hart-Scott-Rodino (HSR) premerger notification process. While we don’t expect all the FTC and DOJ’s sweeping proposals to make it into the HSR final rule, we do expect some changes to be made, and they will likely mean significant additional burdens for filing parties. We also expect to see the FTC’s new rule on non-compete agreements. The FTC’s proposal would ban most non-compete agreements, and some states have already enacted their own prohibitions on non-compete agreements.

If your company engages in M&A, be aware of the new Merger Guidelines.

The newest Merger Guidelines, addressing both horizontal and vertical mergers, were unveiled in December 2023 . One of the most significant changes announced in the 2023 Merger Guidelines are the decreased levels of concentration that will trigger a rebuttable presumption of illegality. Under the new Guidelines, a market share of greater than 30% and a concentration increase of 100 points will be enough to trigger that rebuttable presumption. That is not to say the presumption is the death knell for a transaction, but it does mean that the government enforcement will be aggressive. Also be aware that the 2023 Guidelines introduce new topics, such as labor markets. Early analysis and planning will be critical, requiring involvement of skilled antitrust counsel.

Understand that application of the antitrust laws is constantly evolving.

The language of the core U.S. antitrust laws – the Sherman Act, the Clayton Act, and the FTC Act, hasn’t changed, but the application of these laws is always evolving. For example, the antitrust enforcers and private plaintiffs are increasingly focused on labor issues, such as “no poach” agreements and wage fixing. Antitrust enforcers are also focused on private equity, as evidenced by the FTC’s recent lawsuit against Welsh, Carson, Anderson, and Stowe and some of the changes contained in the proposed revisions to the HSR Rules. Technology is also a significant factor that provokes interesting questions that don’t have answers, at least not currently. For example, do pricing algorithms lead to price fixing? How will antitrust enforcers deal with artificial intelligence?

Pay attention to state antitrust enforcers.

The federal regulators at the Department of Justice and Federal Trade Commission may get most of the attention, but we must never forget that states have their own antitrust laws and their own antitrust enforcers, who have the power to investigate and bring legal action. Often, the state regulators work collaboratively with their federal counterparts, but the state regulators are free to go their own way, such as those targeting various ESG initiatives. Also bear in mind that states are increasingly blazing new trails, such as bans on non-competes. Thirteen states have also enacted “mini” HSR premerger notification statutes for health care deals. It’s always prudent to check the laws of the state or states where business is conducted to determine if there are any state-specific antitrust considerations.

A New Year for Whistleblowers? Emergency Action Needed to Make Current Whistleblower Laws Work

In 2021 the White House, in conjunction with every major executive agency, approved The United States Strategy on Countering Corruption. In this authoritative and non-partisan Anti-Corruption Strategy, the United States for the first time formally recognized the key role whistleblowers play in detecting fraud and corruption. Based on these findings it declared that it was the official policy of the United States to “stand in solidarity” with whistleblowers, both domestically and internationally. As part of the Anti-Corruption Strategy the United States recognized that whistleblower qui tam reward laws must play a major role in combating financial frauds, such as money laundering. The proven ability of whistleblowers to detect fraud among corporate and government elites led the United States government to formally identify them as key players in preventing fraud, strengthening democratic institutions, and combating corruption that threatens U.S. national security.

Despite these findings, leading federal agencies responsible for enforcing whistleblower rights have failed to implement the U.S. Anti-Corruption Strategy’s whistleblower-mandates. Many of their current rules and practices directly undercut and undermine the very whistleblower rights identified by the White House Strategy as playing an essential role in combating corruption.

The 118^th Congress will end on January 3, 2025. Thus, there is one year remaining for Congress and the current-sitting executive officers to act on a number of pending whistleblower initiatives, all of which have strong bipartisan support, are based on the plain meaning of laws already passed by Congress, and which are individually or collectively essential for the implementation of the U.S. Anti-Corruption Strategy. Outside of political interference by those who stand to lose when whistleblowers are incentivized and protected, there is no legitimate reason why these reforms cannot be quickly approved. The actions listed below are needed for the Strategy to be implemented, but whose approval has been stalled or blocked by resistant executive agencies or a timid Congress:

AML Whistleblower Regulations. The Treasury Department must enact regulations fully implementing the money laundering and sanctions whistleblower provisions of the Anti-Money Laundering Act. This law has been in effect since January 1, 2021, but Treasury has failed to implement the required regulations. Congress did its job, but Treasury has dropped the ball on approving the regulations necessary to ensure that the law is enforced. President Biden must demand that his Secretary of Treasury fully implement the anti-corruption Strategy his White House has approved as a critical national security measure.
Justice Department Whistleblower Regulations. Since January 1, 2021 the U.S. Department of Justice (DOJ) has been required, as a matter of law, to accept anonymous and confidential whistleblower disclosures concerning violations of the Bank Secrecy Act, including illegal money laundering and the use of crypto currency exchanges to facilitate violations of law. In December 2022, this requirement was by law extended to whistleblowers, worldwide, who wish to report violations of sanctions covering Russia, Hamas, ISIS, and other covered entities. In contempt of its legal requirements the Justice Department has ignored this law, and has failed to adopt regulations permitting anonymous whistleblowing. Congress did its job, Justice has dropped the ball. President Biden must demand that his Attorney General fully implement the anti-corruption Strategy his White House has approved as a critical national security measure.
SEC Whistleblower Regulations. Although the Securities and Exchange Commission’s (SEC) Whistleblower Program has radically improved since its failure to respond to whistleblower disclosures regarding the fraudster Bernie Madoff, regulations approved over 12-years ago continue to violate the statutory rights granted whistleblowers under the Dodd-Frank Act and strip otherwise qualified whistleblowers of their rights. For example, although the law gives whistleblowers the right to provide “original information” to the SEC through a news media disclosure, the SEC has never enforced this right. This has resulted in numerous extremely important whistleblowers to be denied protection or compensation. In the context of foreign corruption, DOJ statistics inform that 20% of all Foreign Corrupt Practices Act (FCPA) cases (which are covered under Dodd-Frank) are based on news media disclosures. Based on these numbers, one in five whistleblowers who report foreign corruption are illegally denied compensation under current SEC rules. An audit by the Organization of Economic Cooperation and Development released data regarding how whistleblowers were being harmed by the SEC’s interpretation of the law, including the failure to protect whistleblowers who make initial reports to international regulatory or law enforcement agencies, even if these agencies work closely with the United States. The SEC can resolve these issues by issuing clarifying decisions and exemptions consistent with the plain meaning of the Dodd Frank law and Congress’ clear intent. President Biden must demand that his appointments to the SEC fully implement the anti-corruption Strategy his White House approved.
Stop Repeal by Delay. The Internal Revenue Service (IRS) and the SEC both fail to compensate whistleblowers in a timely manner. These delays, which the IRS admits average over 10-years, cause untold hardship to whistleblowers, many of whom have lost their jobs and careers, and their only hope for economic survival is the compensation promised under law. In response to these untenable and unjustifiable delays, Congress has introduced two laws to expedite paying legally required compensation to whistleblowers, the SEC Whistleblower Reform Act and S. 625, the IRS Whistleblower Reform Act. Both amendments have strong bipartisan support and should be/could be passed quickly. See https://www.grassley.senate.gov/news/news-releases/grassley-warren-reintroduce-bill-to-strengthen-sec-whistleblower-program and https://www.grassley.senate.gov/news/news-releases/grassley-wyden-wicker-cardin-introduce-bipartisan-bill-to-strengthen-irs-whistleblower-program.
Strengthen the False Claims Act. The False Claims Act (FCA) whistleblower qui tam provision has proven to be the most effective law ever passed protecting the government from greedy contractors, fraud in Medicare and Medicaid, and from criminal procurement practices. Over $70 billion has been recovered by the taxpayers directly from fraudsters, and countless billions has also been paid in criminal fines. Two bipartisan amendments to the FCA are languishing in Congress. The first is designed to prevent federal contractors from colluding with government officials when trying to justify their frauds. The second permits the federal government to administratively sanction contractors in smaller cases, where prosecutors rarely file charges in court. The Administrative False Claims Act, S. 659, has been unanimously passed by the Senate but is stalled in the House of Representatives. The False Claims Act Amendment targeting collusion has strong bipartisan support, but is awaiting votes in Congress. See https://www.grassley.senate.gov/news/news-releases/senators-introduce-bipartisan-legislation-to-close-loophole-in-fight-against-fraud https://www.grassley.senate.gov/news/news-releases/bipartisan-fraud-fighting-bill-unanimously-passes-senate.
Pass the CFTC Fund Improvement Act. The whistleblower reward law covering violations of the Commodity Exchange Act has proven successful beyond the wildest dreams of Congress. Billions upon billions in sanctions has been recovered from fraudsters who have manipulated markets ripping off consumers across the globe. These unprecedented whistleblower-triggered prosecutions have created an unintended problem: there are inadequate funds available to compensate whistleblowers as required under law. It is unconscionable for Congress to pass a law mandating that whistleblowers obtain compensation when they risk their jobs, reputations, and even their lives to serve the public interest, but then refuse to allocate funding to pay the mandatory rewards. The CFTC Fund Improvement Act, S. 2500, which has strong bipartisan support, would fix this problem. It needs to be immediately passed. Congress must live up to its promises. See https://www.grassley.senate.gov/news/news-releases/grassley-nunn-and-hassan-lead-bipartisan-bicameral-effort-to-bolster-successful-whistleblower-program.
Demand that Federal Agencies Respect, Honor, and Compensate Whistleblowers. One of the most unacceptable and unjustifiable hardships facing whistleblowers is the continued resistance to protecting whistleblowers in numerous (most) federal agencies. This is exemplified by the complete failure of agencies to use their discretionary powers to protect or compensate whistleblowers. The Department of Commerce/NOAA can reward whistleblowers who report illegal fishing or “IUU” fishing violations and crimes committed by large ocean fishing boats operated by countries like China. Yet they have repeatedly failed to implement their whistleblower laws. The same can be said of the Department of Interior/Fish and Wildlife Service which have ignored the Lacey and Endangered Species Acts’ strong whistleblower reward provisions, allowing billions in illegal international wildlife trafficking to fester. Likewise, the Coast Guard largely ignores the whistleblower provisions of the Act to Prevent Pollution from Ships, turning down numerous whistleblower tips and failing to conduct investigations. Worse still, is the Justice Department’s penchant for prosecuting whistleblowers – even those who report crimes voluntarily to the Department pursuant to whistleblower disclosure laws. President Biden must take action and demand that all executive agencies use their discretionary authorities permitted under law to incentivize and protect whistleblowers consistent with the anti-corruption Strategy his administration has approved.

A first step in changing the anti-whistleblower culture that undermines the public interest within most federal agencies is for the President to enforce the National Whistleblower Appreciation Day resolution that has been unanimously passed by the U.S. Senate over the past ten years. The resolution urges every executive agency to acknowledge the contributions of whistleblowers and educate their workforce as to these contributions. See https://www.grassley.senate.gov/news/news-releases/ten-years-running-grassley-wyden-lead-whistleblower-appreciation-day-resolution (S. Res. 298).

The importance of President Biden’s requiring all federal agencies to institute to Senate resolution is clear, based on the text of the resolution asking that all agencies “inform[] employees, contractors working on behalf of the taxpayers of the United States, and members of the public about the legal right of a United States citizen to ‘blow the whistle’ to the appropriate authority by honest and good faith reporting of misconduct, fraud, misdemeanors, or other crimes; and acknowledging the contributions of whistleblowers to combating waste, fraud, abuse, and violations of laws and regulations of the United States.”

These seven reforms all have bipartisan support and/or can be immediately implemented through executive action. There is simply no justification for delaying the implementation of these minimum and absolutely necessary reforms.

But the buck does not stop at the top. Strong and vocal public support can push all of these bipartisan reforms across the finish line. The American people – across all demographics, stand behind whistleblowers. How do we know this? The highly respected Marist polling agency conducted a scientifically valid survey of “likely American voters.” Their findings speak for themselves:

86% of Americans want stronger whistleblower protections
44% of “likely voters” state that the position of candidates on this issue would impact their vote.

Despite the divisions within American society the Marist Poll findings demonstrated that the American public is united in supporting whistleblowers:

84% of people without a college education want stronger protection for whistleblowers
89% of people with a college education want stronger protection for whistleblowers
85% of people earning under $50,000 want stronger protection for whistleblowers
89% of people earning over $50,000 want stronger protection for whistleblowers
86% of people living in urban areas want stronger protection for whistleblowers
83% of people living in rural areas want stronger protection for whistleblowers
86% of women want stronger protection for whistleblowers
87% of men want stronger protection for whistleblowers
88 % of Independents want stronger protection for whistleblowers
78 % of Republicans want stronger protection for whistleblowers
94 % of Democrats want stronger protection for whistleblowers

The only thing holding back effective whistleblower laws in the United States is the lobbying power of special interests and powerful government officials’ hostility toward dissent. This must end. Whistleblowing has proven to be the most effective means to detect waste, fraud, abuse and threats to the public health and safety. The United States Strategy on Countering Corruption represents a roadmap for action. It’s time for the President, Congress and those running agencies such as the Department of Treasury and the SEC to get the job done.

by: Stephen M. Kohn of Kohn, Kohn & Colapinto

For more news on Current Whistleblower Laws, visit the NLR Criminal Law / Business Crimes section.

Despite Record Year, SEC Must Improve Whistleblower Program to Align with White House Anti-Corruption Initiative

SEC Chair Gary Gensler announced on October 25th that in the 2023 fiscal year, the Commission received a record number of 18,000 whistleblower tips.

The SEC Whistleblower Program has grown rapidly and effectively since its inception in 2010 – the 2022 Fiscal Year set a record of 12,300 whistleblower tips. This was a near doubling of the 2020 tips, which set a record of 6,911.

The SEC transnational whistleblower program responds to individuals who voluntarily report original information about potential misconduct. If tips lead to a successful enforcement action, the whistleblowers are entitled to 10-30% of the recovered funds. The programs have created clear anti-retaliation protections and strong financial incentives for reporting securities and commodities fraud.

The U.S. Strategy on Countering Corruption is a White House initiative from December of 2021 that establishes the fight against corruption as a core tenant of national security interests. It outlines strategic pillars and objectives within each. The recommendations on improving the SEC’s whistleblower provisions as outlined below have the same goal of creating stronger processes to combat corruption.

Since the SEC Whistleblower Program was created in 2010, whistleblowers have played a crucial role in the SEC’s enforcement efforts. Overall, since the whistleblower program was established in 2010, “[e]enforcement actions brought using information from meritorious whistleblowers have resulted in orders for more than $6.3 billion in total monetary sanctions, including more than $4.0 billion in disgorgement of ill-gotten gains and interest, of which more than $1.5 billion has been, or is scheduled to be, returned to harmed investors,” according to the 2022 annual report.

This $6.3 billion recovered via sanctions is money that is put back into the pockets of investors and everyday Americans.

The SEC does not credit related enforcement actions to award notifications and sanctions in order to maintain the anonymity and confidentiality of whistleblowers, award notifications don’t tie to underlying enforcement action. The $6.3 billion does not include DOJ enforcement actions, which combined would show a much larger number.

Non-U.S. citizens who blow the whistle on potential securities frauds committed by publicly traded companies outside the United States are eligible to receive awards, as well as those whistleblowers who report violations of the Foreign Corrupt Practices Act. This anti-corruption legislation prohibits the payment of anything of value to foreign government officials in order to obtain a business advantage.

Whistleblowers from over 130 countries have used the SEC Whistleblower Program to report fraud in their workplace.

Despite the massive growth of tips received, many whistleblowers’ cases are dismissed by the SEC due to insubstantial filing errors and strict time parameters on forms, or reported to the news media, other U.S. government agencies, or international government workers in roles that are public abroad but private in the U.S.

Considering these narrow qualifications and to ensure that the process for qualifying as a whistleblower aligns with U.S. anti-corruption priorities, the National Whistleblower Center recommends that the program be improved by expanding the definition of voluntary, further the provisions of identity protection and rewards. These recommendations align with the White House drafted United States Strategy on Countering Corruption.

Whistleblowers identified in case investigations should be automatically eligible for rewards, rather than mandated to meet technical form requirements.

The SEC should maintain their “Three Conditions” qualifications standards and expand the definition of “voluntary.” The current language disqualifies whistleblowers who report fraud to the media, other government agencies, foreign law enforcement, or a U.S. embassy before the SEC, considering them “involuntary.” These restrictions dissuade potential whistleblowers from engaging with the program and thus interfere with federal anti-corruption objectives. The agency must ensure that whistleblowers who file complaints internally before coming to the SEC maintain award eligibility.

The SEC should not incentivize or require whistleblowers to report internally before filing claims with the agency, as this exposes them to retaliation. If a whistleblower was removed from their position, they could no longer provide the Commission with the most updated information, which would harm the investigation.

By establishing a consistent inter-agency protocol concerning whistleblowers who have participated in the crime they report, the SEC can further protect the confidentiality and anonymity of whistleblowers in all ongoing federal investigations surrounding their disclosures.

Whistleblowers must receive the full force of related action provisions and rewards if the company or agency they report is simultaneously being investigated by another branch of government.

SEC regulations should contain strict deadlines for paying awards. These regulations should be premised on the fact that the SEC and Justice Department investigators and prosecutors will know the identity and contributions of all whistleblowers who would qualify for a reward in a particular case.

In the IRS (Internal Revenue Service) Whistleblower Program, procedures require that their investigators file whether or not there was a whistleblower involved in the case at the time the case file is closed. Agents thus know who the whistleblowers are, and the agency can process a claim quickly. The integration of affidavits and statements from front-line investigators into the decision-making process accelerates the reward payout.

Wait times for awards received are another disincentivizing factor for blowing the whistle. The SEC should establish and abide by a strict deadline for paying awards to ensure that whistleblowers are compensated fully and promptly. Rewards should not have a cap limit.

Such changes reinforce the White House Strategy’s objective to “bolster the ability of civil society, media, and private sector actors to safely detect and expose corruption,” “curb illicit finance,” and “enhance enforcement efforts” in the name of “modernizing, coordinating, and resourcing U.S. Government efforts to fight corruption.”

Enhancing the program ensures that whistleblowers whose information successfully leads to enforcement action on money laundering crimes are rewarded, no matter how they provide the information.

Such provisions will demonstrate to international whistleblowers that the risk of blowing the whistle on fraud is worth taking and the United States will support them through the process.

This article was authored by Sophie Luskin.

Category: Corporate Security

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