Today’s Wall Street Journal includes a story (subscription required) of an attorney for the SEC inadvertently “outing” a whistleblower while interviewing an executive of the whistleblower’s former employer. The SEC attorney apparently showed the executive the whistleblower’s notebook during the interview, and the executive recognized the whistleblower’s handwriting.
Outing whistleblowers is certainly not the best way to encourage them to come forward (though the risk of exposure is made more tolerable by Dodd-Frank’s financial incentives).
The SEC, for its part, says that it followed policy in interviewing the executive, but one can expect that its attorneys will be more cognizant of inadvertently outing whistleblowers in the future.
The SEC’s gaffe is a reminder to in-house and private counsel conducting corporate internal investigations to take care not to inadvertently out their sources. A confidential system for employees to report suspected wrongdoing is a key part of any robust internal compliance program, and often is what allows businesses an opportunity to root out and (potentially) self-report wrongdoing before the government makes the choice for them.
Sometimes effective investigation, required reporting to regulators, or other circumstances will dictate that the confidential source’s identity be directly or indirectly revealed. However, whenever possible, a source’s desire for anonymity should be respected, if for no other reason than to encourage others to come forward in the future.