Sean McKessy, the founding director of the whistleblower program at the Securities and Exchange Commission, is joining a law firm in Washington, where he will be an advocate for individuals coming forward with information about fraud or improprieties in their workplaces.
Sean McKessy, the founding director of the whistleblower program at the Securities and Exchange Commission, is joining a law firm in Washington, D.C., where he will be an advocate for individuals coming forward with information about fraud or improprieties in their workplaces.
McKessy, 49, began overseeing the SEC’s whistleblower program in 2011, a year after the Dodd-Frank law ordered the agency to create the unit. Since it was set up, the SEC has dispensed more than $100 million in awards to people who have brought the agency information that led to enforcement actions.
Just last month, a lawyer announced that his client received $22 million for bringing information to the SEC about accounting improprieties at Monsanto, the agribusiness company.
Sean X. McKessy
Education: B.A. in liberal studies and French, University of Notre Dame; George Washington University Law School
Career: Senior Counsel in the SEC’s Division of Enforcement from 1997 to 2000; 2000-2005, securities counsel for Caterpillar; then corporate secretary for Altria Group and AOL; 2011-2016, founding director of SEC’s whistleblower program.
Quote: “When somebody comes forward, the first question should not be, ‘Who told you?’ Instead it should be, ‘What is the problem, and how can it be addressed?’”
Sources: NYT, SEC, LinkedIn
Tips from whistleblowers have resulted in orders for more than $500 million in financial remedies, much of which has been returned to harmed investors, the SEC said.
“I feel I’ve established that I honor the work whistleblowers do,” McKessy said in an interview. “I am hoping to convince many people who are on the fence witnessing fraud to come forward.”
His new employer, Phillips & Cohen, is one of the nation’s most prominent law firms specializing in whistleblower cases. It represented the informer who in 2014 received $30 million under the SEC’s program, its largest award. The firm also represents people who identify fraud at government agencies. It has recovered more than $11.6 billion from civil settlements and criminal fines related to its cases.
“As chief of the SEC’s whistleblower office, Sean was a tireless advocate for whistleblowers and the SEC’s whistleblower program,” said Erika A. Kelton, a partner at Phillips & Cohen. “He played a pivotal role in transforming the SEC’s culture into one that enthusiastically welcomes whistleblowers and appreciates their critical role in advancing the SEC’s enforcement agenda.”
Other government agencies have whistleblower programs, but few are as successful as the SEC’s. The program at the Internal Revenue Service, for example, has been routinely criticized for an apparent reluctance to pursue leads and pay awards.
McKessy said that whistleblowers under the SEC’s program had prospered because the SEC guaranteed anonymity to those who come forward. “The SEC’s devotion to maintaining the confidentiality of whistleblowers is the biggest factor in the program’s success,” he said.
The agency’s system has also worked well, McKessy said, because its leaders were committed to the program from the start. “This wasn’t a mandate foisted upon an agency,” he said. “When I walked in the door, it was very clear that the SEC chair and head of the enforcement division were dedicated to making the program work.”
One reason for this commitment may stem from the beating the agency took for its dismissal of a whistleblower who had warned that Bernard Madoff’s longtime money management business was a Ponzi scheme years before Madoff’s fraud emerged.
Directing the SEC’s program was McKessy’s second job at the agency. From 1997-2000, he was senior counsel in the enforcement division. Then he moved to the private sector, holding senior legal or governance positions at Caterpillar, Altria Group and AOL.
When he headed the whistleblower office, he said, he made it a point to tell corporations that whistleblowers were not the enemy. “I wanted to let companies know these people have a role to play,” McKessy said. “When somebody comes forward, the first question should not be, ‘Who told you?’ Instead it should be, ‘What is the problem, and how can it be addressed?’ ”
McKessy left the SEC on July 31 and is subject to a one-year ban on appearing before the agency on behalf of clients.
For many whistleblowers, McKessy said, bringing fraud to light held many perils, including retribution and job loss. As a result, he said, one of his goals in overseeing the SEC’s program was to make it easier for people to participate.
“I’m hoping we can change the dynamic so it’s not so dangerous to come out and say you did this work,” McKessy said. “It’s disturbing to me how many whistleblowers have told me that had they known what they would go through, they would never have come forward.”