A non-partisan group has determined that corporate objections to the new securities whistleblower program are unfounded. The Dodd-Frank Act instituted a policy that rewards employees for revealing illegal companies practices to regulators. This policy offers the whistleblowers rewards of 10-30 percent of SEC penalties greater than $1 million. Additionally, whistleblowers can remain anonymous if they go through an attorney. Since this program has the potential to clean up many of Wall Street’s dark dealings, corporate management has “been trying to kill the Securities and Exchange Commission’s whistleblower reward program ever since Congress created it under the Dodd-Frank Act two years ago,” (See “Whistleblower Case Against GE, New Report Show Real Motives For Attacks on SEC Program,” Erika Kelton, Forbes). Large businesses have repeatedly attacked the program claiming that their internal reporting systems will be crippled. They go as far to say “the rule ‘will make it harder and slower to detect and stop corporate fraud.’ “
A non-partisan group has proven these claims to be false. The group discovered that just 2% of whistleblowers report only outside of their company. Moreover, the vast majority of whistleblowers report problems internally before going to an outside source. The conclusion ? the whistleblower program does not weaken the companies’ internal policing.
It is now more profitable and easier for employees to stop illegal dealings. With many multimillion penalties levied on businesses for illegal practices, whistleblowers now have the opportunity to be rewarded for their diligence and honesty. Also, being able to anonymously complain through an attorney prevents company lash back as do the provisions of Dodd-Frank that prohibit retaliatory acts against whistleblowers. In the past, corporations have used intimidation to perpetuate illegal practices but this new rule promises to bring more accountability to wrongdoers.
Page Perry is an Atlanta-based law firm with over 170 years of collective experience maintaining integrity in the investment markets and protecting investor rights.