UK’s View Across the Pond at U.S. Whistleblower Program Success – Time to Incentivize Tipsters?

Several recent developments may spark a renewed effort to incentivize United Kingdom (UK)-based whistleblowers who frequently provide tips to U.S.-based agencies, such as the Security and Exchange Commission (SEC). The confluence of legislative developments, remarks by the director of the UK’s Serious Fraud Office (SFO), and the British Parliament’s focus on a scandal that rocked the post office may pave the way for new legislation providing incentives for tips to government authorities in the UK.

In making his remarks, the director of the UK’s SFO noted the proliferation of tips from UK nationals to U.S. government agencies, including more than 700 from the UK. This recognition of the success of American-based enforcement efforts that incent whistleblowers through lucrative rewards has caught the eye of our friends across the pond.

Law enforcement in the UK is just catching notice of what whistleblowers already know – when incentivized, whistleblowers come forward. According to the SEC’s most recent report to Congress, the SEC whistleblower program has global appeal. The SEC Whistleblower Program receives tips from around the world. Most tips in 2023 originated from Canada, the UK, Australia, Germany, and India. Nationally, the SEC receives the most tips from Florida, South Carolina, California, Texas, and New York. See annual report here.

The SEC Whistleblower Program, established in the Dodd-Frank Act, is only one of the U.S. government’s reward programs open to people in foreign countries. The federal False Claims act and state-based whistleblower programs are open to U.S. citizens and foreign nationals alike. Other U.S. reward programs which are open to non-U.S. citizens include the Foreign Corrupt Practices Act, the Internal Revenue Act, the Commodity Futures Trading Commission (CFTC), and multiple statutes aimed at protecting the environment. The increased exposure U.S. based companies have faced in the wakes of these whistleblower reward programs has often led to improvements within companies. The development of internal reporting systems, in the long run, have led to fewer lawsuits and external reports to regulatory and legal authorities.

In some instances, whistleblowers have reported UK-based fraud to U.S. authorities before UK authorities have learned of it.  For example, the CFTC learned about the LIBOR manipulation occurring in London from a Deutsche Bank whistleblower who received a $200 million award. U.S. authorities received the tip before the UK Financial Conduct Authority had wind of it. The reason is that the UK programs offer no financial reward for whistleblowers who provide information to government authorities – even when very large sums are recovered from fraudsters.

It is to be seen whether the UK enacts legislation to provide wider protections or incentives for whistleblowers. Parliament is currently considering a whistleblower law which would penalize persons who retaliate against whistleblowers. Read the whistleblowing bill here. The proposed law would provide financial redress (there is no cap) to a whistleblower who has suffered “loss or damage.” The proposed Office of the Whistleblower would also be empowered to impose fines on violators of whistleblower protections. Companies could face fines of “10% of annual global turnover, not to exceed £18,000,000.” The current legislation misses the mark – it protects people who speak up, but lacks the powerful economic incentives at the heart of successful U.S.-based whistleblower programs that have caught the eye of UK leaders.

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