Section 806 of the Sarbanes-Oxley Act of 2002 (the “Act”) contains the first federally-imposed, broad based “whistleblower” protection. Generally speaking, any company, with securities registered under Section 12 of the Securities Exchange Act or which is required to file certain reports under the Securities Exchange Act is subject to civil penalties if an officer, employee or agent (the protected “class” contained in Section 806), is discharged, demoted, suspended, threatened, harassed or otherwise discriminated against because such employee provided information, caused information to be provided or otherwise assisted with an investigation related to fraudulent acts.
Professional Bank, (the “Company”), does not have any class of securities registered under Section 12 of the Securities Exchange Act and is not required to file reports under the Securities Exchange Act; therefore, the Company is not subject to Section 806 of the Act. Nevertheless, the Company while not legally obligated to do so, embraces the spirit of Section 806 as consistent with its own internal goals for corporate citizenship and so, has adopted this policy to encourage employees to report to responsible persons possible: (i) violations of law, including the securities law, (ii) accounting irregularities and (iii) other suspected wrongdoing, including their own. The goal of this policy is to discourage illegal activity and business conduct that damages the Company’s good name, franchise, business interest and its relationships with shareholders, suppliers, and the community at large. While the Company does not desire, encourage, or expect frivolous complaints, it does want any officer, employee or agent of the Company (each an “affected person”) who know of a harmful violation or potentially harmful violation (defined below) to contact the appropriate representative of the Company through one of the methods contained in Section 7.
1. General Policy
The Company notes that Sections 806 and 1107 of the Sarbanes-Oxley Act of 2002 provide certain legal protections to “whistleblowers”. Under Section 806, companies that are subject to these provision and their officers, employees, vendors, suppliers and agents cannot discharge, demote, suspend, threaten, harass, or in any other manner discriminate (collectively, “retaliate” or “retaliation”) against employees who provide information in investigations- including internal investigations-into certain types of violations of the securities laws and regulations, or who file proceedings relation to similar violations. Additionally, under Section 1107, any person who:
“knowingly, with the intent to retaliate, takes any action harmful to any person, including interference with the lawful employment or livelihood of any person, for providing a law enforcement officer any truthful information relating to the commission or possible commission of any Federal offense, shall be fined under this title or imprisoned not more than 10 years, or both”.
In keeping with the spirit of Sections 806 and 1107 of the Sarbanes-Oxley Act of 2002 and t promote good governance in the public welfare, the Company therefore adopts the following policy statement:
- Any affected person who, in good faith, initiates a Disclosure pursuant to this policy with respect to Harmful Violation or potential Harmful Violation is referred to as a “Whistleblower” and is protected from any retaliation by the Company. A “Harmful Violation” means the following:
- violations of law, including any rule of the Securities and Exchange Commission, applicable to the Company or its officers, employees, contractors, subcontractors or agent, federal laws relate to fraud against the Company’s shareholders, and the applicable laws and regulations of any jurisdiction in which the Company operates;
- improper accounting entries, violations of internal accounting controls or improper auditing matters;
- any attempt to conceal a potential Harmful Violation or evidence of a potential Harmful Violation; or
- any retaliation (defined above) for any report, complaint, allegation or other disclosure made pursuant to this policy (a “Disclosure”).
“Good Faith” means that the employee has a reasonable held belief that the Disclosure made by the Affected Person is true and has not been made either for personal gain or for any ulterior motive.
Investigations will be conducted as expeditiously as possible, taking into account the nature and complexity of the Disclosure and the issues raised therein.
2. Purpose of the Policy
The Company has adopted this policy in order to:
- cause Harmful Violations to be disclosed before they can disrupt the business or operations of the Company, or lead to serious loss,
- promote a climate of accountability with respect to Company resources, including its employees, and
- provide a means whereby the affected person(s) can safely raise, internally and at a high level, serious concerns and disclose information that the affected person(s) believes in good faith could cause a harmful violation.
This policy does not apply to all grievances, such as those related to terms of employment or those concerns that are addressed by the Company’s policies on anti-discrimination, sexual harassment, fair lending or privacy. This policy is supplemental to the Code of Business Conduct and Ethics applicable to all employees of the Company.
Nothing in this Policy is intended to create a contract between the Company and any officer or employee of the Company.
3. Role of the Audit Committee
3.1 Requirements. Section 301 of the Sarbanes-Oxley Act requires the audit committees of companies to:
- establish procedures for receiving, retaining, and handling complaints to the public company regarding accounting, internal accounting controls, or auditing matters; and
- establish a means for employees of the public company to submit confidential and anonymous reports “regarding questionable accounting or auditing matters.”
Although the Company is not a public company subject to these requirements at the present time, this policy and the procedures set up as part hereof have been adopted by the Company to promote good governance in the public welfare.
3.2 Independence. The Audit Committees of public companies and certain privately held banking institutions must be “independent” which means that the Audit Committee is made up of outside directors and must not consist of members of management. “Independence” also means, generally speaking, that Audit Committee members cannot accept consulting, advisory or other compensatory fees from the Company, (other than Director’s fees) and an Audit Committee member cannot be an affiliated person with the Company.
While not required to do so, the Company’s Audit Committee members meet this test of independence, as a matter of internal corporate policy.
4. Affected Persons Protected.
This policy and the related procedures offer protection from retaliation to affected persons who make any Disclosure with respect to matters that are, or could give rise to, Harmful Violations, provided the Disclosure is made:
- in Good Faith;
- in the reasonable belief of the individual making the Disclosure that the conduct or matter covered by the Disclosure could give rise to, Harmful Violations, and
- pursuant to the procedures contained in Section 7 below.
No complaint that satisfies these conditions will result in any retaliation or threat of retaliation against the Whistleblower by the Company or any officer, employee, contractor, subcontractor or agent of the Company. Any acts of retaliation against a Whistleblower shall be treated by the Company as a serious violation of Company policy and could result in discharge.
If it is determined that a non-employee (including any contractor, subcontractor, or other agent) has violated this policy against Retaliation, the Company will take appropriate corrective action, which could include severing the contractor, subcontractor, or agency relationship
5. Confidentiality of Disclosures.
The Company will treat all Disclosures by Whistleblowers as confidential and privileged to the fullest extent permitted by law. The Company will exercise particular care to keep confidential the identity of any affected person making a Disclosure under this procedure until a formal investigation is launched. Thereafter, the identity of the affected person making the Disclosure may be kept confidential, if requested, unless such confidentiality is incompatible with a fair investigation, unless there is an overriding reason for identifying or otherwise disclosing the identity of the Whistleblower or unless such disclosure is required by law. In this instance, the affected person making the Disclosure will be so informed in advance of his or her name being identified with the Disclosure. Where disciplinary proceedings are invoked against any individual following a Disclosure under this procedure, the Company will normally require the name of the person making the Disclosure to be disclosed to the person subject to such proceedings.
Thus, the Company provides a means pursuant to this Policy for individuals to put their name to any Disclosure they make, but any affected person may also make anonymous Disclosure as provided in Section 7.3(c) below (or optionally via return of the Disclosure form anonymously). In responding to an anonymous Disclosure, the Company will pay due regard to fairness to any individual named in the Disclosure, the seriousness of the issue or facts raised, the credibility of the information or allegations in the Disclosure and the prospects of an effective investigation and discovery of evidence based upon an anonymous Disclosure.
6. Unsubstantiated Allegations.
If an affected person makes a Disclosure in good faith pursuant to this policy and any facts alleged are not confirmed by subsequent investigation, no action will be taken against the Whistleblower. In making a Disclosure, all individuals should exercise due care to ensure the accuracy of the information disclosed. If after investigation, a matter raised under this procedure is found to be without substance or to have been made for malicious or frivolous reasons, the person making the Disclosure could be subject to disciplinary action.
Where alleged facts disclosed pursuant to this policy are not substantiated, (a) the conclusions of the investigation will be made known to the person who made the Disclosure and may be made known to the person(s) against whom any allegation was made in the Disclosure and (b) all papers, if any, relating to the allegations and investigation will be removed from the personnel record of the person against whom any allegation was made in the Disclosure.
7. Disclosure Procedures.
- 7.1 Certain complaints may be more appropriately addressed through regular channels, rather than under this policy. An affected person should therefore first consider whether the appropriate person to receive a complaint, depending upon the nature thereof, is the affected person’s immediate supervisor or other member of Company management. When, however, the complaint may involve or be against the person or persons against whom the complaint is made, the affected person should use an alternative reporting person.If, however, a complaint is believed in good faith to be a Harmful Violation hereunder and therefore within the Audit Committee’s purview, and/or the affected person desires to make a Disclosure and claim Whistleblower status, the Disclosure should be to the individual designated below in subpart 7.3. It is not sufficient to report a suspected violation to a co-worker or to any person other than individual designated below if Whistleblower status is sought.
- 7.2 A sample Disclosure Form is attached hereto as Exhibit A, which is recommended for use by affected persons making Disclosures and in documenting matters covered by the Disclosure. This form provides an optional means of making a Disclosure anonymously. Delivery of the Disclosure Form, if not in person, shall be made via U.S. Mail or other common courier, and labeled “personal and confidential”, in addition to being addressed to the appropriate recipient named below.
- 7.3 Any Disclosure made by an affected person under this policy must be sent to the Company’s Audit Committee Chairman.
- 7.4 Exhibit B to this policy provides the current appropriate representative for the person identified above, as well as providing the name and contact information. The currently serving person so designated shall be updated by the Company by periodic revision to Exhibit B and published as provided in section 12 below.
- 7.5 If the Company’s Audit Committee Chairman receives a Disclosure, the original of such Disclosure shall immediately be delivered to the Company’s legal counsel. A sample Chairman’s Report of Disclosure Form is attached as Exhibit C. The Audit Committee Chairman shall retain a log of Disclosures and a file for each Disclosure, which file shall be maintained in a secure location to protect the confidentiality of the Disclosure.
- 7.6 The Legal Counsel, where appropriate, shall offer advice and counsel with the Company’s Audit Committee Chairman as to the proper response to the Disclosure, such as, but not limited to, commencement of an investigation, engagement of general counsel, other professionals, prompt referral to the Audit Committee and/or communication, if any, with the Whistleblower.
8. Investigation and Response.
- 8.1 The Company’s Audit Committee Chairman shall have primary responsibility for investigation of Disclosures. In consultation with general counsel, such investigation and the proper response to the Disclosure may include engagement of general counsel or other professionals, and/or communication with the Whistleblower. In all cases where a Disclosure contains allegations of any accounting or financial reporting irregularity or impropriety which implicates an executive officer, general counsel shall be consulted.
- 8.2 Unless the Disclosure is made anonymously, an affected person should expect some response to the Disclosure no later than two weeks after the Disclosure, unless the affected person believes in Good Faith that conditions warrant a quicker reply, in which case the affected person shall detail those conditions as part of his or her initial Disclosure and suggest expedited treatment.
- 8.3 An affected person who is not satisfied with the response after following the procedure set out in Section 7 or who has not received a response within the time period contained in Section 8.2 may invoke this Section 8.3. The affected person should continue to discuss the Disclosure with the person(s) to whom the initial Disclosure was directed or to the person assigned to investigate the Disclosure. However, the Disclosure shall thereafter also be directed, in writing, and confidentially, to the Chairman of the Audit Committee of the Company. The Company’s Audit Committee Chairman shall then make a preliminary investigation of the facts alleged in the Disclosure and may, in its discretion, report in writing to the Legal Counsel, with a request that the Legal Counsel investigate further and report to the Audit Committee in a period of time specified by the Chairman of the Audit Committee. The Audit Committee may appoint another person to undertake the preliminary investigation, provided that the findings and conclusion of the person so appointed shall be reported to and through the Legal Counsel before the report is made to the Audit Committee.
- 8.4 If on preliminary examination, the concern, issue or facts raised or alleged in any Disclosure are judged to be wholly without substance or merit, the matter shall not be further investigated and the Whistleblower informed of the decision and the reasons for such decision. [See also Section 6]. If it is judged that the allegation(s) or issue(s) covered in the Disclosure have merit, the matter shall be dealt with in accordance with this policy, the Company’s normal disciplinary procedures and/or as otherwise may be deemed appropriate according to the nature of the case, including referral to appropriate authorities or regulators.
- 8.5 Subject to Section 8.3, if any Disclosure relates to the alleged conduct of a director of the Company, the Disclosure shall be referred to the Audit Committee for investigation. The Audit Committee may retain general counsel to investigate the facts and allegations contained in such a Disclosure.
A report of all substantial Disclosures and any subsequent actions taken will be made to the Audit Committee in detail, and in summary in all other cases.
Except for unsubstantiated allegations which are addressed in Section 6, the conclusion of any investigation will be communicated to the person or persons against whom the Disclosure is made and to the affected person making the Disclosure.
10. Disclosure Reporting.
The Chairman of the Audit Committee shall make at least a quarterly report (and more frequently if circumstances suggest) to the Audit Committee of (i) the number of Disclosures made, (ii) the number of investigations commenced in response to Disclosures, (iii) the number of wrongdoings discovered, and (iv) all disciplinary actions taken in response to matters discovered through Disclosures. The Chairman of the Audit Committee may demand an accounting and detailed report of any Disclosure not yet reported to the Committee, a report of the fact of Disclosure having been made previously to the Chairman as provided in Section 7.6 and via Exhibit C, or if Section
8.3 was invoked.
11. Annual Review.
This policy will be reviewed annually by the Audit Committee after consultation with Legal Counsel taking into account the effectiveness of the policy in promoting proper disclosure, but with a view to minimizing the opportunities to cause improper investigations.
A link to this Policy shall be posted on the Company’s website, www.professionalbankfl.com and shall also be available via the Company’s share drive. A copy of this policy may also be requested at any time from the Chief Risk Officer of the Company.
[End of Policy]
SECTION I: The Initial Disclosure may be made Anonymously. Thus, this information in Section I is optional.
Name: Tel: E-mail:
Do you wish to be contacted by the investigating officer(s) regarding the status of the investigation? □ Yes □ No
SECTION II: (Not optional, if known)
Type of Violation: □ Violation of Law (Legal) □ Accounting/Auditing □ Retaliation
Date Affected Person became aware of potential violation:
Violation is: □ Ongoing □ Completed □ Unclear whether ongoing or completed
Department suspected of violation:
Individuals suspected of violation:
Describe all of the relevant facts of the violation:
How did Affected Person become aware of the violation:
Steps taken by Affected Person, if any, prior to this Disclosure:
Who, if anyone, may be harmed or affected by the violation?
If the violation is legal, estimate the amount of loss to the Company as a result of the violation, if known:
If the violation relates to accounting/auditing matters, estimate the amount of the misreporting and indicate the affected category (or categories) of misreporting, if known:
|Category:||□ Assets||□ Liabilities||□ Expenses|
|□ Revenues||□ Valuation||□ Equity|
SECTION III: (Optional)
Provide any suggestions for remedying the violation:
Other relevant information, if any:
|Chairman of the Audit Committee||Leslie Adler||
|firstname.lastname@example.org||Leslie Adler, CPA
Binstock, Rubin, Adler, Aldecoa & Ellzey, P.A.
9100 So. Dadeland Blvd., Ste. 1600
Miami, FL 33156
|General Counsel||Mike Mitrione Esq.||
(tel): 561- 650-0553
777 South Flagler, Ste. 500
West Palm Beach, FL 33401-6194
|Chief Risk Officer||Luis Castillo||
396 Alhambra Circle., Ste. 255
Coral Gables, FL 33134
CHAIRMAN’S REPORT OF DISCLOSURE FORM
A Whistleblower Disclosure has been made: □ Anonymously □ By the Person Named Below
Type of Violation: □ Violation of Law (Legal) □ Accounting/Auditing □ Retaliation
Date Affected Person became aware of potential violation:
Date of Disclosure Received:
Department suspected of violation:
And/or Individuals suspected of violation