Monique Melis (pictured), Global Head of Consulting at Kinetic Partners, the global professional services firm comments on whistle blowers…
As the SEC has previously noted, the whistleblower program is one of the more powerful weapons in its law enforcement arsenal. The steps the regulator has taken, such as instituting incentive rewards for whistleblowers to come forward, have already proven effective and led to a number of successful enforcement actions.
However, as an industry we must ask ourselves whether or not awarding whistleblowers so substantially sends the right message or if it could encourage misguided whistleblowing by self-interested or malicious tipsters. This is risky in its own right and undermines the value behind the principle of whistleblowing.
Whilst whistle blowers deserve protection and incentives to come forward, we also need to be mindful of knee jerk reactions and the impact that launching enforcement actions can cause to the end consumer, such as increased costs for products. Enforcement theoretically is meant to seek cures to underlying issues in the industry, so regulators must be wary of how they foster a whistleblowing culture.
As always balance is key. In the end, rewarding whistleblowers several millions may not necessarily be a sensible option. While it is important for regulators to facilitate self-reporting and whistleblowing, going too far in one direction or another could have an unintended destabilising effect on the markets.