How whistleblowers get paid
Information can be gold for whistleblowing purposes. U.S. government agencies regularly report multi-million dollar rewards to whistleblowers. Here’s just one example: In October 2020, the Securities and Exchange Commission announced an award of more than $114 million to a whistleblower whose information and assistance led to a successful enforcement action.
But other would-be whistleblowers get nothing because they didn’t strictly follow the regulations or meet the requirements that govern how and when whistleblowers are rewarded.
“In part, it depends on how you sell the tip,” says Cory C. Kirchert, a member of SECIL Law and Of Counsel in the Washington, D.C., office of Arnall Golden Gregory LLP. Any would-be whistleblower is competing with thousands of tips, he notes. And the more recoveries there are and the larger the recoveries, the number of tips increases.
“And by selling the tip,” he adds, “you need to put together essentially a theory of liability under the relevant statute. And you need to put together the information you have, organize it as best you can, and then suggest without being disrespectful, but totally courteously, you suggest an investigative strategy. That does two things, in my opinion. One is it enhances the desirability of your tip over others. And secondly, it can accelerate the investigation.”
It’s critical to understand any financial rewards you may be entitled to under the law, says Scott Williams, CEO of Ethic Alliance. Consider these points:
a. Numerous U.S. federal and state laws reward whistleblowers for coming forward, typically in the 10%-30% range of amount recovered or sanctions levied.
b. The standard is usually original, credible information. Better and more information leads to higher percentage payouts from the government.
c. There can be a variety of claims from healthcare or Medicare fraud to sanctions violations to securities violations to bribing government officials
d. Whistleblower statutes don’t apply just to U.S. citizens, but the U.S. government must have jurisdiction over the entity alleged to have done the illegal conduct. U.S. jurisdiction could extend to a U.S. citizen or company, a company listed on a U.S. stock exchange, or a company that sells services to the government, regardless of where in the world the illegal conduct occurred.
The federal False Claims Act allows a whistleblower, or “relator,” to file what’s known as a qui tam complaint. The U.S. may then investigate the allegations and elect whether to intervene and take over the action or to decline to intervene and allow the relator to go forward with the litigation on behalf of the United States. If a settlement is reached, the relator is generally able to then share in any recovery.
Whereas in the past there weren’t any financial rewards for whistleblowing – it was just the right thing to do -- incentives have changed to some extent, says Kirchert. “It's like any kind of reward: people are willing to come forward because there's more of an offset to the potential cost. There's an actual benefit other than just one's integrity. There's also a monetary benefit. So I think it's a little bit of both now. But in the past it certainly wasn't the monetary reward.”
One federal agency, the Securities and Exchange Commission, has itself alone awarded approximately $1.2 billion to 268 individual whistleblowers since issuing its first award in 2012. Whistleblowers can be eligible for an award when they voluntarily provide the SEC with original, timely, and credible information that leads to a successful enforcement action. Whistleblower awards can range from 10 percent to 30 percent of the money collected when the monetary sanctions exceed $1 million.
Contact Ethic Alliance at info@ethicalliance.com