Eleven million dollars. That is roughly how much money the Securities and Exchange Commission (SEC) has paid to whistleblowers so far this year. The most recent award was for over $5 million—the third biggest award ever (Thomas, 2016), although dwarfed by a $30 million award in 2014 and a $14 million award in 2013.
Since 2011, when the whistleblower program began, the SEC has awarded more than $62 million to 28 whistleblowers (Cassin, 2016). That might not sound like very many whistleblowers have benefited from the program, but that has not deterred callers; in 2015, the SEC received nearly 4,000 tips through its Office of the Whistleblower hotline or other means.
Not much is known about most of these whistleblowers because, as Cassin reminds us, by law, the SEC has to protect the confidentiality of whistleblowers and not disclose information that might reveal a whistleblower’s identity.
The two preceding sentences offer a lesson for companies in general—employees and other company insiders value the opportunity to report their concerns about ethical lapses or illegal behavior, especially if they can expect anonymity or confidentiality.
Thomas, who played a role in developing the SEC whistleblower program, offers two additional “lessons to be learned” in his blog post. He says, “Corporate wrongdoing can be difficult to detect, investigate, and prosecute without assistance from insiders.” And, “the culture within the financial services industry has led too many otherwise ethical people to feel powerless against illegal or unethical behavior.”
What can we learn from these statements? First, it is not just the SEC that needs the help of insiders to identify potential wrongdoing; companies need the help of their employees and other stakeholders to do the same. As has been reported repeatedly by the Association of Certified Fraud Examiners, tips in general, from employees or others, are the most common means for detecting fraud and those organizations with ethics hotlines improve the chances of detecting fraud. Confidential hotlines play a big role in ethics and compliance efforts.
Second, corporate culture is a powerful influence on employee behavior. Policies that encourage reporting, protect anonymity, acknowledge the contributions of whistleblowers, and ensure that appropriate action is taken, can overcome feelings of powerlessness. Such policies also help create and sustain a positive, ethical corporate culture.
Ethical Advocate provides comprehensive ethics and compliance solutions, including ethics and compliance training and confidential and anonymous hotlines that meet regulatory and reporting needs.
Cassin, Richard. “SEC Awards Whistleblower $3.5 Million After First Denying Claim.” The FCPA Blog, May 16, 2016. http://www.fcpablog.com/blog/2016/5/16/sec-awards-whistleblower-35-million-after-first-denying-clai.html
Thomas, Jordan. “SEC Whistleblower Collects Over $5 Million, Third Biggest Award Ever.” The FCPA Blog, May 18, 2016. http://www.fcpablog.com/blog/2016/5/18/jordan-a-thomas-sec-whistleblower-collects-over-5-million-th.html