WilmerHale’s Susan Muck was quoted in an article in Compliance Week titled, “When Academic Studies and Hoax Hotline Claims Go ‘Off the Rails.’”
The article poses a question of what to do when an anonymous tip comes through a company’s hotline that a senior executive has engaged in insider trading. In the case, a PhD student at the National University of Singapore (NUS) earlier this summer had sent numerous fabricated anonymous allegations to multiple companies in order to gauge their hotline response rate for field research. The article discusses how the allegations are convincing enough to warrant an investigation, so compliance enlists the help of outside counsel—only to later discover it was all a lie in the name of academic research.
“By and large, companies take whistleblower reports very seriously,” Muck says. “Often, investigations will involve outside counsel, auditors, or even regulators in certain instances.”
When considering vague insider trading allegations, some companies might seek the assistance of a forensic audit firm to gather electronic data to spot any red flags. “They’re looking for the needle in the haystack, and there is no needle,” Muck adds.