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Offering Options To Potential Whistleblowers

Organizational Ombudsmen Can Be In-House Outlets for Complaints

Connecticut Law Tribune

November 21, 2011

Authors: Charles L. Howard

The enactment of the Dodd-Frank Wall Street and Consumer Protection Act last year and implementing regulations from the Securities and Exchange Commission earlier this year were strongly opposed by many groups, such as the Association of Corporate Counsel, because they create a bounty system for whistleblower tips made directly to the SEC rather than encourage reporting through a company’s internal channels.

Dodd-Frank is only the most recent attempt by the government to ferret out reports of misconduct by giving incentives to whistleblowers; the False Claims Act (FCA) dates back to the Civil War era, and at least from the government’s perspective, has been very successful, in recovering tens of billions of dollars by offering a bounty to whistleblowers.

These laws reflect a wider pattern that has emerged over the past few decades in corporate governance, as well as in employment and criminal law, in which organizations have a duty to encourage reporting, investigation, and correction of any misconduct. Yet, given the renewed fear that would-be whistleblowers will bypass internal reporting channels in favor of government bounties, perhaps it is time for a closer look at how companies can strengthen their internal systems to lessen the allure of whistleblower bounties. To view the article in its entirety, click here.

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