TheCorporateCounsel.net

Unfortunately, companies must continue to be on guard for bogus whistleblower complaints. As Liz first noted back in June, companies began receiving a variety of bogus whistleblower emails out of the blue, and John recently identified additional fake emails that were received by companies. The prospect of receiving fake emails complicates matters for company whistleblower programs, as they must implement additional steps to vet incoming messages to determine if they are legitimate complaints. We still do not know why this hoax has been perpetrated.

In this memo, Troutman Pepper provides an overview of the fake whistleblower complaints that companies have been receiving and addresses the best course for approaching this unusual situation:

Although the motives of the complainants in these cases are unclear, it appears that these complaints may relate to attempted cybersecurity scams. These potential “hoax” insider trading, bribery, or accounting fraud claims may present initial challenges for companies in evaluating whether the whistleblower complaints are legitimate grievances, or attempts to circumvent company cybersecurity controls. Accordingly, companies should take special care in investigating purported insider trading or other whistleblower claims where the source of the complaint and/or the employee involved in the alleged misconduct is/are anonymous. Specifically, company counsel (both internal and outside counsel) should collaborate with the company’s compliance and ethics, internal audit, cybersecurity and information technology personnel to evaluate the legitimacy of the complaint and determine whether any response to the complaint is warranted. If a company is unsure whether a recent whistleblower complaint alleging insider trading or other alleged misconduct is a hoax, we recommend that the company err on the side of caution and include IT when responding to the complaint to avoid downloading any links or other information that may be contained in the complaint.

We can only hope that whoever is sending these fake complaints will grow tired of the hoax, or will realize that their efforts are being thwarted by companies carefully vetting the complaints when they are received.

– Dave Lynn