Houston Texas Business Lawyer

Is 2014 Really the ‘Year of the Whistleblower’?

An experienced whistleblower attorney knows that there are many benefits when insiders come forward and report corruption and wrongdoing. Whistleblowers can protect the public health by revealing corporate behavior that could be dangerous, and can protect taxpayers and investors by revealing financial fraud or other deceptive business attorney-whistlepractices. Federal laws provide protection to whistleblowers from retaliation for a long time so people who see wrongdoing can come forward and report it without having to worry about losing their jobs or facing other retaliation by those on whom they are blowing the whistle. Many people over the years have taken advantage of these protections.

Now, however, Forbes is describing 2014 as the 'Year of the Whistleblower." In the recent Forbes article on this topic, the writer opens by warning "employers who do not take steps to address any employee concerns before they reach whistleblower status" that they do so at their peril. Forbes believes that whistleblowing has snowballed in recent years since 2011 and is likely only to expand in the coming year.

Why 2014 May Be the Year of Whistleblowers

Forbes points out that there are currently more than federal 20 statutes in place that protect people who blow the whistle in the areas of environmental law, food safety and aviation.  These protections for whistleblowers, however, have existed for a long time and aren't the reason why so many people are coming forward.

Instead, the so-called "new age of whistleblowing" was reportedly ushered in when Bradley Birkenfeld received $104 million for reporting a tax evasion scheme to the IRS that his employer, UBS, had been perpetrating. 

While it is customary for whistleblowers to receive a portion of the money that they help to recover by reporting fraud, this case was an unusual one because Birkenfeld was not an innocent victim who just happened to observe wrongdoing. Instead, he was convicted and sent to jail for participating in the exact same scheme that he reported on to get his $104 million.

Many others observed this action and decided that they too would come forward to share the information about their employer's fraudulent or deceptive practices so they too could reap big rewards. This partly accounts for the big increase in the number of whistleblowers.

Protections have also expanded in recent years, including with the passage of the Dodd-Frank financial reform law that added more protection for whistleblowers and that prompted the Securities and Exchange Commission (SEC) to open special offices for whistleblowers.   

The SEC's Office of the Whistleblower was first established in 2011 but did not grant the first award to a whistleblower until August 2012. This was for a nominal amount. 

In October of 2013, however, the SEC's Office of the Whistleblower awarded more than $14 million to someone who alerted the agency to wrongdoing. This has been described as a "game changer" that is likely to "lure employees in various other companies to be the next to win the whistleblower jackpot."

These awards are a positive for those who come forward, but it is also important to remember that everyone in society benefits when fraud is uncovered, reported and brought to light so it cannot happen again.

Brewer & Pritchard, P.C. has law offices in Houston, TX and represents clients nationwide. Call 713-209-2950 to schedule a free consultation