A new study by University of Iowa professor Jaron H. Wilde confirms the importance of whistleblowers in deterring corporate misconduct. The New York Times published an article this week highlighting the findings of the study. The article by Gretchen Morgenson, titled “Whistle-Blowers Spur Companies to Change Their Ways” explains that the study demonstrates “for the first time” that “financial shenanigans at companies decrease markedly in the years after truth tellers come forward with information about wrongdoing inside their operations.”

Of course, False Claims Act whistleblowers and their attorneys have long known the effectiveness of whistleblower programs. But it never hurts to confirm: whistleblower programs are absolutely the most effective tool in stopping and preventing fraud and corporate misconduct.

Dr. Wilde, who holds a Ph.D. in accounting, looked at whistleblower retaliation complaints filed with the Department of Labor. The complaints, filed under the whistleblower protections created by the Sarbanes Oxley legislation in 2002, involved 317 public companies. Wilde found that accounting irregularities and other misconduct decreased significantly in the two years following a whistleblower complaint.

In the last decade, whistleblower programs, which provide financial rewards and protection from retaliation to whistleblowers, have proliferated. Whistleblowers rewards—when the government pays a percentage of the fines and other recoveries in an enforcement action to the individual that alerted the government to the fraud—have been around since the Civil War. The False Claims Act, for example, pays the whistleblower up to 30 percent of a settlement or verdict for alerting the Department of Justice about fraud against government programs, such as Medicare or Medicaid. Following major tax and accounting scandals in the early 2000s, as well as the massive fraud associated with the housing crisis, Congress created whistleblower programs that also provide for awards of up to 30 percent for reporting violations that fall under the jurisdiction of the Securities and Exchange Commission and the Commodities and Futures Trading Commission—also known as the SEC and CFTC Whistleblower Programs. In addition, informants with information about federal tax fraud can receive similar awards for reporting to the Internal Revenue Service through the IRS Whistleblower Program.Along with these financial incentives, laws that protect whistleblowers from retaliation and, in some cases, allow them to remain anonymous, have also grown in number and scope. But becoming a whistleblower means not only dealing with the potential stigma but also navigating these complex laws and regulations. Fortunately, there are attorneys who specialize in this type of law and are often able to represent whistleblowers with no upfront cost to the client.

The whistleblower attorneys at Levy Konigsberg are experienced in helping whistleblowers navigate the False Claims Act, SEC, CFTC, and IRS whistleblower programs. If you have information relating to major fraud or corporate misconduct, contact us today for a free confidential consultation at (800) 315-3806 or toll free at 1-800-988-8005.


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