When the Securities and Exchange Commission announced the highest award to date for an S.E.C. whistleblower, 14 million and when the agency refused to reveal his or her name as part of it’s unique secrecy doctrine, the field of play concerning financial fraud was altered immediately. Prior to this award the amounts rendered to whistleblowers were so small it was ridiculous. $50,000 was the top award in August 2012.
Now, individuals working in hedge funds, banks, equity houses, bond trading operations and publicly traded companies know they can reveal large fraud and still retain their positions, not revealing their identities except to their lawyers. That is a big change.
In addition, the awards are expected to increase based on the amounts of fraud detected and the penalties assessed. Whistleblowers can yield up to 30% of the government recovery.
Essentially, employees have been deputized through this new whistleblower program and the prior concerns of reputational damage are over.
Business ethics has taken on a new cloak. Financial rewards for revealing wrongdoing.