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SEC Whistleblower Chief to Leave Agency

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Sean McKessy, chief of Office of the Whistleblower at the Securities and Exchange Commission, will leave the agency later this month, the SEC announced Friday. Deputy Chief Jane Norberg will serve as acting chief.

“The SEC’s whistleblower program has had a transformative impact on the agency, and Sean’s service as the first head of the Whistleblower Office has contributed greatly to the program’s success,” Andrew Ceresney, director of the SEC’s Enforcement Division, said in a statement.

That success includes awards of over $85 million to 32 whistleblowers. The office has received over 14,000 tips from every state and 95 foreign countries, resulting in sanctions of more than $504 million.

The office has also worked to protect tippers from retribution by employers. The Dodd-Frank Act authorized the SEC to bring action against companies that retaliated against whistleblowers, and in June 2014, the SEC initiated its first such action, charging Paradigm Capital Management with engaging in prohibited principal transactions, then forcing the resignation of the trader who reported the violations. In April the following year, that trader was awarded over $600,000 for his efforts.

The same month, the SEC initiated its first action against a firm for including “improperly restrictive language in confidentiality agreements” with employees that could limit their ability to report wrongdoing they witness. The SEC charged Houston-based global technology and engineering firm KBR Inc. with violating whistleblower protection Rule 21F-17, Melanie Waddell reported on ThinkAdvisor in April.

The SEC charged that KBR’s confidentiality agreements included language that witnesses in internal investigations could face discipline or be fired for speaking with outside parties without the firm’s approval.

KBR did not admit or deny the charges but agreed to cease and desist from any future violations, and to pay a $130,000 penalty. It voluntarily amended its confidentiality agreements to make clear that employees were free to report possible violations.

“Sean has been a staunch advocate for whistleblowers, a relentless promoter of the program, and an invaluable advisor on these issues,” Ceresney added.

The whistleblower office was established by the Dodd-Frank Act and went into effect July 21, 2010. McKessy has served as the head of the office since February 2011. He previously was senior counsel in the enforcement division from 1997 to 2000.

The SEC announced in June that Stephen Cohen, associate director of the SEC’s enforcement division, would leave the agency as well. Cohen was involved in developing the agency’s whistleblower provisions and oversaw the creation of the Tips, Complaints and Referrals system.


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