McQueary would be like an intern finding out about a ponzi scheme, then going right to either the CEO (given JoePa's actual status in Penn State), or the divisional President (given Joe's decisions to pass this up the chain).

In that case, the CEO/Div. Pres. has oversight authority. He's a lot more culpable for the goings on in his organization than the intern is. Passing it up the chain wan't really wash with the FTC or SEC in terms of attempting to prevent further fraud by your firm. Especially not if you allow the rogue trader to keep using company offices.