Whistleblowers are much in the news. With stories ranging from Jim Marchese of “Real Housewives of New Jersey” fame collecting his second whistleblower legal settlement, to the SEC announcing a $1 million dollar whistleblower payout to a compliance officer, the volume of whistleblower activity is clearly increasing.
(The SEC Release is at:
Whistleblowers clearly play a key role in the detection of fraud. The SEC’s Office of the Whistleblower says: “Assistance and information from a whistleblower who knows of possible securities law violations can be among the most powerful weapons in the law enforcement arsenal of the Securities and Exchange Commission”.
If you would like to get to the story of how blowing the whistle affected one person’s life and career, skip to the links at the end of this entry. But first, here is some background about how regulators have tried to create paths for whistleblowers.
Congress has built ways for whistleblowers to do what their label says, blow the whistle when they find something that is wrong, a major focus in the efforts to combat fraud.
The Sarbanes-Oxley act created a whistleblower’s hotline to the audit committee and required that whistleblowers be able to blow the whistle anonymously. The Dodd-Frank Act created a separate incentivized hotline directly to the SEC. A whistleblower using the Dodd-Frank hotline can also remain anonymous and may even be entitled to cash rewards if the matter about which they blow the whistle results in penalties against the company.
Importantly, companies are not allowed to try and restrict employees in blowing the whistle. This is an important enough issue that the SEC has enforced against companies and levied fines when companies try to limit how employees can contact the SEC. A very recent example is against KBR’s use of a confidentiality agreement containing overly restrictive language, summarized at:
You can learn more about the Dodd-Frank hotline and the SEC’s Office of the Whistleblower at:
One would think with all this legislative and SEC support being a whistleblower is becoming an easier path to walk. However, it is still true that few events in a persons professional career are more stressful and disruptive than blowing the whistle.
Marketplace and Propublica have put together an interesting study of how one whistleblower’s path unfolded. It is a great example with lots of gray issues, a prolonged period of uncertainty, and many other complications. You can read and hear about it at: