The payoff for society in rewarding whistle-blowers

A US program that pays for tips on company fraud helps highlight the role of employees as guardians of their firm's integrity.

Securities and Exchange Commission Chairman Jay Clayton testifies before a Senate committee June 27.

In late July, a government agency handed over nearly $2.5 million to one person and $1.7 million to another. If the payouts had been lottery winnings, they might have drawn big headlines. Yet the rewards were barely noticed because they went to individuals who had simply revealed financial misconduct to the US Securities and Exchange Commission.

The SEC did not disclose the names of the whistle-blowers or the companies involved. But the message was clear: For employees who uncover wrongdoing, honesty is a reward beyond itself. (And the benefits to them and society can far surpass those of government lotteries.)

Since 2012, when the SEC first began to offer a bounty for insider tips on fraud and other types of corruption, it has given $156 million to 45 whistle-blowers. And these cases have led to the recovery of nearly $1 billion in penalties. Former SEC Chair Mary Jo White says whistle-blowers have become “key sources of very significant cases” and their disclosures have a “transformative impact” on the enforcement of financial laws.

Congress has passed several laws since the 1970s aimed at protecting whistle-blowers from reprisals. But it was the Dodd-Frank Act, passed after the 2008-09 financial crisis, that called for a large monetary incentive for anyone who reveals credible and timely information about a company’s shenanigans – as long as they are not themselves culpable. Since the whistle-blower award program started, the SEC has received more than 14,000 tips, many from people in other countries. The information has triggered hundreds of investigations and improved the rate of convictions and the severity of sentences.

These acts of courage – despite a fear of possible retaliation by a boss – show that many employees see themselves as guardians of their company’s integrity. A rise in whistle-blowing is also improving the ethical behavior of companies. A recent study by University of Iowa professor Jaron Wilde showed a significant decrease in financial irregularities in companies after a whistle-blower incident. That sort of beneficial effect may be the reason that Steven Mnuchin, President Trump’s secretary of the Treasury, backs laws that support whistle-blowers.

Leaks that reveal financial misdeeds are improving more than American companies. Since the 2016 release of the so-called Panama Papers, which showed a mass abuse of offshore tax havens by politicians worldwide, corruption scandals have erupted in many countries. In Pakistan and Iceland, the prime ministers were forced to resign.

The big lesson in rewarding whistle-blowers is that the vice of financial wrongdoing can be curbed not only by punishment but also by highlighting the virtues of honesty and transparency. Justice over evil always requires a measure of goodness. And it can all start with one person’s brave call to the SEC.

You've read  of  free articles. Subscribe to continue.
Real news can be honest, hopeful, credible, constructive.
What is the Monitor difference? Tackling the tough headlines – with humanity. Listening to sources – with respect. Seeing the story that others are missing by reporting what so often gets overlooked: the values that connect us. That’s Monitor reporting – news that changes how you see the world.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to

QR Code to The payoff for society in rewarding whistle-blowers
Read this article in
QR Code to Subscription page
Start your subscription today