White: What risks do whistleblowers face?ĭey: There are social and emotional consequences, and there are also career consequences. We also found that cash-for-information regimes do not increase the number of frivolous tips filed with regulators or change the probability that the employee whistleblower will first report the issue internally. Ultimately, the most effective way to protect whistleblowers is to compensate them financially for the costs they incur. But we can show that it’s very difficult to prevent retaliation just with provisions that say you are not allowed to retaliate. Regulators and politicians are more willing to talk about laws prohibiting retaliation. Heese: The concern in most countries around the world, in many different types of whistleblower regimes, is that you will get all of these frivolous tips. That changes how we think about whistleblower incentives it isn’t a reward.Īiyesha Dey: The debate is about whether it is frivolous, disgruntled employees going to regulators for financial motives, or whether people are coming forward when it is needed and they just get compensated for some of the cost they incur. Whistleblowers incur a lot of costs and get some money as compensation. The big thing is that “cash for information” may not be the right way to talk about it, because it comes across as if someone is making a lot of money without any costs. Some may need to move to another state or another industry to find a job, and they may not find a job at the same level." It goes back to the Civil War, and it has been adopted by modern regulators, such as the SEC whistleblower program, the DOT’s Motor Vehicle Safety whistleblower program, and more recently the Treasury’s anti-money-laundering whistleblower program that was passed into law in 2021. Jonas Heese: Our research focuses on specific legislation known as the False Claims Act, which was the first cash-for-information whistleblower law in the world.
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“We need to understand the costs,” explains Heese, “and how to empower the people who have important information to share that information.”Īpril White: Do you think regulators have the necessary tools to encourage people to come forward with information?
Dey and Heese set out to study the experiences of about 2,400 whistleblowers who filed lawsuits under the False Claims Act, which rewards whistleblowers who report fraud against the federal government with a percentage of the money recovered. Their response: We’ve thought about it, but it is so costly.Īt a time when regulators and employers alike are increasingly relying on whistleblowers to prevent and investigate fraud, the professors realized, there is little understanding about the real risks faced by an employee who steps forward. Have you ever thought about blowing the whistle? Dey asked her students.
The case focused on the company’s response to the complaint, but the class discussion turned to the motivations of the man who revealed the wrongdoing. In 2018, HBS associate professors Aiyesha Dey and Jonas Heese wrote a case about a whistleblower at a multi-national gambling company who exposed financial misstatements, first to his manager and later to the US Securities and Exchange Commission.
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