May 9, 2024
More than a decade after a global financial crisis and the Bernie Madoff Ponzi scheme led to the establishment of two whistleblower award programs in the U.S., more U.S. regulators and other agencies worldwide are seeing the benefits of paying individuals for helpful information, signaling a change in momentum on the debate.
Regulators both inside and outside the U.S. in recent years have adopted or are looking to establish their own cash-for-tips programs, as existing ones in the U.S. become a mainstream part of enforcement efforts.Â
In early March the U.S. Justice Department said it would start a pilot program that would pay whistleblowers who tell prosecutors about corporate crime, adding a new incentive to attract more tipsters to aid in the government’s enforcement efforts. A similar whistleblower award program has been proposed by lawmakers for the Consumer Financial Protection Bureau.Â
Observers believe that the Justice Department established the pilot program, in part, after seeing the value whistleblowers are bringing to enforcement cases, based on the number of referrals prosecutors have received from the SEC and CFTC, according to Christina McGlosson, the former acting director for the CFTC’s whistleblower program and now a special counsel at law firm Cohen Milstein Sellers & Toll. She noted that the whistleblower tips accounted for one-third of all active CFTC enforcement investigations in fiscal year 2023.
Read More Regulators Eye Whistleblower Award Programs Hoping for Insider Tips.