Whistleblowing and Sarbanes-Oxley

Bianca Martin
LEG 500 Law, Ethics & Corp. Governance
Strayer University
Professor: Keith S. Smith

Whistleblowing Whistleblowing has come to describe a wide range of disclosures, both within organizations and outside organizations (Trevino, 2015). Whistleblowing empowers workers to speak up for principles and ethics and shine a light on unethical practices that can cause negative consequences for consumers, citizens and colleagues. Internal whistle blowing can be very valuable for an organization; reports of misconduct, given early and taken seriously, can prevent disaster (Trevino, 2015). Alternately, public whistle blowing has collapsed and shamed many organizations. Research suggests that it’s usually very difficult to report wrongdoing in organizations (Trevino, 2015). Among the main reasons people fail to report are fear of retaliation for reporting, and the belief that nothing will be done. Equally, those who do report say that they did so because they felt supported by managers and coworkers, they believed something would be done, and they were able to report anonymously (Trevino, 2015). For those who do report, most people prefer to handle issues within the organization before venturing outside, and most will go to their direct supervisor first (Trevino, 2015). Recently, protection for certain types of whistleblowing has increased with legislation such as the U.S. False Claims Act, Sarbanes-Oxley and the creation of the Office of the Whistleblower by the Securities and Exchange Commission (SEC).

Whistleblower Due To Receive $63+ Million Reward Keith Edwards, a former J.P. Morgan employee is due to receive a nearly $64 million payment from the U.S. government for the tips he provided as a whistleblower. According to (Veire, 2014), Mr. Edwards provided information that led to a payment by J.P. Morgan to the government in the amount of $614 million stemming from insurance on home loans. Allegedly, J.P. Morgan had been falsifying certifications for Federal Housing Administration and Department of Veterans Affairs loans, going back as far as 2002 (Veire, 2014). As a result, the agencies reportedly suffered substantial losses. Mr. Edwards was able to collect his reward under the False Claims Act (Veire, 2014). Under the False Claims Act, the government reportedly collected roughly $3.8 billion in 2013 alone – a big year for the Justice Department (Veire, 2014). Under this act, individuals can sue the target company directly. The government may elect to join the whistleblower in pursuit of the target company in court. Whistleblowers can also benefit from a countless of other whistleblower reward programs, including Dodd-Frank and Sarbanes-Oxley (Veire, 2014). Unlike the False Claims Act, whistleblowers under these acts will not bring suit against the target company directly (Veire, 2014). Rather, whistleblowers will simply provide the government with the “tip.” It is then up to the government to pursue the bad actor or not. Whistleblowers can also benefit from a myriad of other whistleblower reward programs, including Dodd-Frank and Sarbanes-Oxley (Veire, 2014). Unlike the False Claims Act, whistleblowers under these acts will not bring suit against the target company directly. Rather, whistleblowers will simply provide the government with the “tip.” It is then up to the government to pursue the bad actor or not.
Nonetheless, whistleblowers under these acts can also reap large rewards for the information they provide. Under Dodd-Frank, the Securities and Exchange Commission (SEC) has paid over $14 million in rewards in the past two years alone (Veire, 2014). Under Dodd-Frank the SEC is looking for tips that will aid in the successful investigation of securities laws violations (Veire, 2014). In return, a whistleblower may be entitled to between 10% and 30% of all monies recovered (Veire, 2014).
Once you have made the decision to be a whistleblower, a major concern should be to make sure that you have maximized your potential to receive your reward. It is important to know how to present your “tip” to the appropriate government agency (Veire, 2014). A properly prepared and presented “tip” may increase the chances that the government pursues the case (Veire, 2014). Whistleblowers should also be aware of potential pitfalls that may compromise their ability to collect an award (Veire, 2014).

Works Cited
Trevino, L. (2015). Whistleblowing. Retrieved January 15, 2015, from Business Integrity Through Research: http://ethicalsystem.org

Veire, R. V. (2014, March 21). Articles Posted in Whistleblower Issues. Retrieved January 15, 2015, from New York Securities Lawyers Blog: www.newyorksecuritieslawyersblog.com