Study Shows Companies Face Larger Penalties When Whistleblowers Involved

A recently published study indicates that companies face much larger monetary penalties whenever a whistleblower is involved in enforcement actions against the company. In an average case, those companies paid penalties that were 63 percent higher with whistleblowers than in cases where there was no whistleblower. 

Data for the study came from information from the Department of Justice and the Securities and Exchange Commission for cases between 1978 and 2012. The authors of the study looked at data for that 24-year period about penalties for financial misrepresentation and controlled for characteristics relating to the size of misrepresentation, such as the total number of executives penalized in a specific case. Even by putting these controls in place on the data, it became very clear that whistleblowers have a large effect on the kinds of penalties issued in enforcement actions against companies. 

There was also some information taken from whistleblower complaints filed with OSHA, usually about retaliation against whistleblowers for raising their concerns and reporting them. 

Other interesting items to note from the study: 

  • Enforcement actions involving whistleblowers generally took about 10 months longer to process than enforcement actions without whistleblowers
  • Whistleblowers were involved in about 13 percent of all enforcement actions in the study
  • Individuals that were convicted on charges associated with the whistleblower enforcement actions got prison terms that were an average of 2.5 years longer in length 

The findings of this study go to show the importance that whistleblowers have in enforcement actions. It stands to reason that the penalties in these types of cases are much more severe when whistleblowers are involved because it took the whistleblower standing up and alerting authorities to the wrongdoing for the company to be caught in the act. 

Protect your rights when you choose to act as a whistleblower by working with the respected Dallas attorneys at Whistleblower Law for Managers.