Blowing the Whistle
| Author | David Kirk |
| Published date | 01 February 2013 |
| Date | 01 February 2013 |
| DOI | 10.1350/jcla.2013.77.1.808 |
| Subject Matter | Opinion |
OPINION
Blowing the Whistle
David Kirk*
Chief Criminal Counsel, Enforcement and Financial Crime, Financial Services
Authority
On 21 August 2012 the Office of the Whistleblower,1which was estab-
lished in 2011 by the US Securities and Exchange Commission (SEC),
reported that it had made its first award to a whistleblower. The SEC ‘is
authorised by Congress to provide monetary awards to eligible indi-
viduals who come forward with high-quality original information that
leads to a Commission enforcement action in which over $1,000,000 in
sanctions is ordered. The range for awards is between 10% and 30% of
the money collected’. In this instance, the whistleblower ‘who helped
the Securities and Exchange Commission stop a multi-million dollar
fraud will receive nearly $50,000—the first payout from a new SEC
programme to reward people who provide evidence of securities
fraud’.
The setting up of the SEC Office of the Whistleblower in the US (and
similar schemes, such as the one operated by the Internal Revenue
Service) has started a debate in the UK about whether there is justifica-
tion for following the SEC example of giving financial rewards to people
who report activity which is in breach of SEC rules. This debate has been
given added impetus by the slew of revelations since 2008 about bad
banking ethics.
Whistleblowing has become a sizeable industry in the UK and else-
where, but there are concerns. Whistleblowing hotlines have prolifer-
ated in many areas of business, and the assessment of information
gathered in this way is a vital tool in the prevention of crime. It is also a
very time-consuming task. The motivation of whistleblowers can lie
somewhere between pure altruism and revenge, and one question for
Whitehall legislators is whether paying for information will increase
either the quantity or the quality (or both) of the material provided, and
whether it will lead to the uncovering of dubious activity that would
otherwise lie dormant. Another way of putting this question is whether
the desired ends can be achieved without creating a moral hazard.
The UK legislative framework for whistleblowing employees is now
based on the Public Interest Disclosure Act 1998 (amending the Employ-
ment Rights Act 1996), which defines ‘whistleblowing’ as making a
disclosure in the public interest. Protected disclosures may be made by a
worker, acting in good faith, about conduct which is criminal, dangerous
or damaging to the environment, or where a miscarriage of justice has
* The views expressed in this article are those of the author and do not necessarily
reflect the views of the Financial Services Authority or the Journal of Criminal Law.
1 SEC Office of the Whistleblower at http://www.sec.gov/whistleblower, accessed 10
December 2012.
1The Journal of Criminal Law (2013) 77 JCL 1–3
doi:10.1350/jcla.2013.77.1.808
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