Last summer, Congress passed a Dodd-Frank bill that offers more whistleblower protection. After the biggest recession since the Great Depression, Congress decided that offering more protection and incentives to whistleblowers might help prevent another financial crisis. The Dodd-Frank Wall Street Reform and Consumer Protection Act (H.R. 4173) was passed which has numerous provisions designed to encourage whistleblowing and to provide robust protection from retaliation from an employer. Named after two Congressman who worked on the bill, Barney Frank and Chris Dodd, it was signed into law by President Barack Obama on July 21, 2010. It is by far the most sweeping change to financial regulation since the Great Depression.
This comprehensive Act affects various aspects of financial services. However, I wanted to discuss one part of it today that deals specifically with whistleblowers. A whistleblower is someone who raises a concern about alleged wrongdoing occurring in a government or governmental entity or a private or public corporation or an organization or agency that is expected, by the public at large, to be operating within the bounds of the law. The term comes from British police who would often blow a whistle when they saw someone committing a crime. Whistleblowers often face retaliation from their employers and/or fellow employees. The whistleblower protection in this Act is designed to encourage employees to come forward when they see something that they know is wrong. It’s also designed to discourage employers from doing things unethical or illegal.
The main part of this Act that encourages whistleblowing is that the whistleblower can receive from 10% to 30% of amount recouped by the SEC or IRS. So it could be like winning the lottery. Factors to be considered in determining the amount of the award include the significance of the information provided by the whistleblower, the degree of assistance provided by the whistleblower, the programmatic interest of the SEC in deterring violations of the securities laws by making awards to whistleblowers, and other factors that the SEC may establish by rule or regulation.
This Act makes a CEO look around his or her board room and think, “Is that guy going to blow the whistle on me?” Or, “Am I going to blow the whistle on him?”
If you know me, you know that I’m not a huge fan or Barney Frank, Chris Dodd, or any of their cronies. Of course, I think that it’s good to encourage honesty in both private enterprise and government agencies. We all know that unethical and dishonest practices don’t JUST occur in the private sector. But at the same time, does this turn people into money hungry, whistleblowing lottery chasers? Is this Act going to better protect consumers, or will it just hurt business?
I would love to hear your opinion on this and see what real Americans think. Please enter your comments at the end of this post!
If you would like to view the actual provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (H.R. 4173), Click HERE.