It might seem there is no benefit in whistleblowing in the U.S, but consider this: On Thursday, the U.S. Securities and Exchange Commission announced it had given its largest reward ever – nearly $50 million – to a whistleblower. The SEC did not name the recipient but said the truth-teller provided “firsthand observations of misconduct” from inside a financial firm.
The reward is the latest in a remarkable string of achievements for the SEC in promoting honest governance in corporations. Since last October, the agency has handed out more bounty than ever to tipsters whose information resulted in successful action against corruption. Since 2012, when the SEC first began giving monetary incentives to whistleblowers, it has awarded over $500 million. Of that amount, it gave $100 million just in the past eight months.
The Wall Street Journal did identify the recipient of the $50 million as Grant Wilson, a former currency trader at Bank of New York Mellon Corp. The bank ended up paying $714 million in fines and other compensation after Mr. Wilson led the SEC to investigate allegations of fraud at BNY Mellon.
Governments have learned that it is not enough to protect whistleblowers from retaliation by employers. Corporate integrity must be encouraged by rewarding individuals driven by conscience to shine a light on malfeasance.
The success of the SEC program comes at a good time. With the U.S. government handing out trillions of dollars to keep companies afloat during the COVID-19 crisis, many more employees are reporting misuse of those funds. The SEC took in about 4,000 complaints from mid-March to mid-May, or a 35% increase from a year ago.
The concern about fraud in coronavirus-related spending is not only in the U.S. In April, 92 organizations around the world, including Transparency International, called on governments and corporations to guarantee the safety of whistleblowers during the pandemic.
The vast majority of money recovered in U.S. fraud cases is a result of tips from whistleblowers. For their integrity and risk-taking, they deserve a portion of the proceeds. For many of them, honesty is its own reward. But if taking a reward encourages others to follow suit, their honesty is a way to pay it forward.