Special Rules for Directors, Partners, or Auditors

Special Rules for Directors, Partners, or Auditors


Directors, partners, and auditors are often in the best positions to become whistleblowers. They are more likely to be made aware of corrupt practices and are able to gain the trust of other employees. Auditors may discover misconduct in their reports, or better yet, be asked to cover it up by the C-Suite. A 2015 report by the Institute of Internal Auditors found direct evidence of chief auditors being asked to modify audit results, asked to not perform audits in certain high-risk areas, and asked to produce audits solely for the purpose of employee retaliation. Rules differ under each of the whistleblower laws, but agencies acknowledge that for how well-placed these employees are, they should act as “recruitment-in-place” style whistleblowers. Read the Rule for the five tips offered to those reporting as a director, partner, or auditor.

Practice Tips

  • The SEC regulation on auditor, compliance, and director eligibility for rewards is set forth at 17 C.F.R. § 240.21F-4(b)(4)(iii) and (v).
  • The Commodity Futures Trading Commission’s regulation on auditor, compliance, and director eligibility is set forth at 17 C.F.R. § 165.2(g)(4), (5), and (7).
  • Best practice: If you are a compliance official, director, attorney, or auditor, file your reward claim 120 days after the company was alerted to the violation.


The problems faced by auditors and compliance officials are well documented.

  • Institute for Internal Auditors, “Political Pressure Intense on Internal Audit: IIA Research Report Reveals Pervasive Efforts to Influence Internal Audit Findings,” press release (Mar. 10, 2015).

The Institute for Internal Auditors survey of auditors is known as the Global Internal Audit Common Body of Knowledge. The survey’s results were analyzed in:

See also:

SEC decisions granting awards to compliance officials:

Requirement that publicly traded companies have a program to accept confidential employee concerns regarding questionable accounting and auditing practices is codified at:

The development of the SEC’s rule on director, partner, attorney, and compliance official coverage is discussed at:

  • “Speech by Chairman Mary L. Schapiro,” U.S. Securities and Exchange Commission, Washington, DC (May 25, 2011) (SEC whistleblower program)
  • Stephen Kohn, “The SEC’s Final Whistleblower Rules and Their Impact on Internal Compliance,” West Law Publishing (Oct. 2011) (rights of compliance officials to blow the whistle)

Whether auditors, compliance officials, or employees whose duties require them to perform compliance functions are protected against retaliation remains a controversial topic. However the two decisions issued by the Supreme Court demonstrate that without specific statutory coverage, internal disclosures by these classes of employees may be unprotected.

See Supreme Court decisions finding internal whistleblowing not protected under the Dodd-Frank Act and First Amendment:

However, a wealth of cases decided before Digital and Garcetti explained the fact that whistleblowers often used internal reporting processes and should deserve protection:

Pre-Digital cases discussing whether compliance officials, auditors, and attorneys are covered under anti-retaliation laws:

Quick Links

  • 17 C.F.R. 205 – Standards of Professional Conduct for Attorneys

Compliance professionals are on the front line of uncovering and reporting fraud. However, the pressure to change audit reports came from the top.

Frequently Asked Questions

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All purchases or donations proceeds go to support the National Whistleblower Center, a 501(c)(3) non-profit organization dedicated to supporting whistleblowers.

What's Inside

This books covers all federal and state laws regarding whistleblowing, including protections, rewards, and procedures for whistleblowing.

Meet the Author

Stephen M. Kohn is considered the world’s leading authority on international whistleblower law, and behind some of todays modern whistleblower rules.

Introduction: The Revolutionary Roots of Modern Whistleblowing

Law Library

The Law Library is a free companion to the Rules for Whistleblowers, complete with relevant whistleblower cases and important links and resources.

Speaking Engagement

Stephen Kohn enjoys speaking to universities of all sizes, students and professionals, the media, general public, and government officials.

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