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Study Finds Benefits to Whistleblower Complaints for Corporations

A study from the University of Iowa indicates that financial wrongdoing within corporations tends to see a marked decrease after a major whistleblower complaint. Researchers looked at various companies’ financial reporting after they were involved in alleged improprieties. The data in the study was from the years 2003 to 2010.

This was the first major study that examined the impact of whistleblower complaints on the businesses and organizations engaged in wrongdoing — and how they responded in the years following.

A sensitive issue for businesses

While there are more incentives than ever for whistleblowers, these individuals continue to face certain risks when coming forward. Employers may retaliate against them, threatening to demote or terminate them — and they sometimes follow through with those threats. Others may simply ignore the whistleblowers’ internal complaints, which can backfire significantly if the individual decides to report the complaint to a regulator or file a lawsuit against the company.

The U.S. Securities and Exchange Commission (SEC), for its part, has an Office of the Whistleblower that provides awards to any whistleblowers who make complaints resulting in enforcement actions of $1 million or more. The program, approved as part of the Dodd-Frank Act of 2010, has distributed more money on a year-by-year basis since its creation in 2011. Successful whistleblowers may receive 10 to 30 percent of the fines issued against the offender.

If you are aware of legal or ethical violations occurring within your business or organization, you may be eligible for a reward from the SEC or another regulatory agency. To learn more about your options, meet with a knowledgeable Dallas attorney at Whistleblower Law for Managers.

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