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Whistleblowers: Incentives, Disincentives, and Protection Strategies

Book Description

Solid guidance for managing whistleblower policies in light of the new Dodd-Frank Act provisions

In July 2010, President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act that greatly expanded whistleblower bounties in connection with violations of federal securities laws, including the Foreign Corrupt Practices Act. Discussing business protection strategies and best practices in dealing with whistleblowers, Whistleblowers will appeal to board members, executives, corporate compliance personnel, attorneys for whistleblowers and defense attorneys, as well as potential employee whistleblowers.

  • Case studies of GlaxoSmithKline, Pfizer and other high profile whistleblower incidences

  • Examines new Dodd-Frank incentives to whistleblowers

  • Recommends best practices for corporations in light of new whistleblowing incentives

  • Explores other federal and state statutory incentives to whistleblowing

  • Timely and comprehensive, Whistleblowers emphasizes the disincentives to whistleblowing, reviewing the academic studies of whistleblowers with the idea of developing best practices in working with whistleblowers.

    Table of Contents

    1. Cover
    2. Series
    3. Title Page
    4. Copyright
    5. Dedication
    6. Other Works by Frederick D. Lipman
    7. Foreword
    8. Acknowledgments
    9. Introduction
      1. CLASSIFICATION OF WHISTLEBLOWERS
      2. ORGANIZATION OF BOOK
      3. NOTES
    10. Part One: The Whistleblowers and the Dodd-Frank Incentives
      1. Chapter One: The Dramatic Expansion of Whistleblower Awards under Dodd-Frank
        1. WHISTLEBLOWER PROVISIONS OF DODD-FRANK
        2. WHAT IS “ORIGINAL INFORMATION”?
        3. WHAT ARE VIOLATIONS OF THE FEDERAL SECURITIES LAWS?
        4. RULE 10B-5: MARKET MANIPULATION
        5. VIOLATING THE ACCOUNTING STANDARDS
        6. FALSE FINANCIAL STATEMENTS BY PUBLIC COMPANIES
        7. OTHER SECURITIES LAWS
        8. PROTECTIONS FOR WHISTLEBLOWERS
        9. COMMODITY EXCHANGE ACT
        10. NOTES
      2. Chapter Two: The Remarkable Story of Cheryl Eckard and the $96 Million Bounty under the False Claims Act
        1. WHO IS CHERYL ECKARD?
        2. ECKARD'S POST-TERMINATION ACTIVITIES
        3. ECKARD'S SUPERIORS
        4. BACKGROUND ALLEGATIONS
        5. ALLEGED VIOLATIONS
        6. TIMELINE OF ECKARD'S ALLEGED ACTIVITIES
        7. THE LESSONS OF GLAXO
        8. NOTES
      3. Chapter Three: The Pfizer Whistleblowers Who Collected Over $100 Million under the False Claims Act
        1. JOHN KOPCHINSKI
        2. BEXTRA
        3. THE COMPLAINT
        4. PFIZER LESSONS
        5. NOTES
    11. Part Two: Disincentives and Factors Motivating Public Disclosure
      1. Chapter Four: Disincentives to Internal Whistleblowers
        1. FINANCIAL DISINCENTIVES
        2. NONFINANCIAL DISINCENTIVES
        3. CONTRACTUAL COMMITMENTS AND FIDUCIARY DUTIES
        4. ETHICS RESOURCE CENTER SURVEY
        5. REINSTATEMENT AS A REMEDY
        6. EMPIRICAL STUDY
        7. NOTES
      2. Chapter Five: Women as Whistleblowers
        1. SHERRON WATKINS
        2. CYNTHIA COOPER
        3. COLEEN ROWLEY
        4. EXTERNAL REPORTING BY INTERNAL WHISTLEBLOWERS
        5. WHISTLEBLOWER ANONYMITY
        6. NOTES
    12. Part Three: Organizational Best Practices
      1. Chapter Six: Why Should Organizations Adopt a Robust Whistleblower System?
        1. DIMINISHMENT OF SHAREHOLDER WEALTH
        2. BOARDS OF DIRECTORS
        3. WE WERE DUPED!
        4. EXECUTIVE WHISTLEBLOWERS
        5. WHY INDEPENDENT DIRECTORS CANNOT RELY SOLELY ON INDEPENDENT OR INTERNAL AUDITORS
        6. LEGAL STANDARD
        7. CAREMARK
        8. RECOMMENDED STRATEGY
        9. CRIMINAL LIABILITY OF AN ORGANIZATION
        10. RESPONSIBLE CORPORATE OFFICER DOCTRINE
        11. THE ACME MARKETS CASE
        12. THE U.S. DEPARTMENT OF JUSTICE CRIMINAL GUIDELINES
        13. THE DISADVANTAGES OF A ROBUST WHISTLEBLOWER SYSTEM
        14. NOTES
      2. Chapter Seven: Establishing a Robust Whistleblower System
        1. PROBLEMS WITH THE CURRENT WHISTLEBLOWER SYSTEM
        2. INITIAL STEPS
        3. ELEMENTS OF A ROBUST WHISTLEBLOWER POLICY
        4. INDEPENDENT DIRECTORS MUST BE IN CHARGE
        5. THE WHISTLEBLOWER PROGRAM MUST BE INDEPENDENTLY ADMINISTERED
        6. WHISTLEBLOWER COMPLAINTS SHOULD BE INVESTIGATED BY INDEPENDENT COUNSEL REPORTING DIRECTLY TO THE INDEPENDENT DIRECTORS
        7. THERE SHOULD BE NO PRESUMPTION THAT ANONYMOUS COMPLAINTS ARE LESS DESERVING OF INVESTIGATION
        8. MOTIVATIONS AND PERSONALITY OF THE WHISTLEBLOWER ARE NOT RELEVANT TO THE TRUTH OF THE ALLEGATIONS
        9. ABSOLUTE PROTECTION OF WHISTLEBLOWERS' IDENTITY IS ESSENTIAL
        10. ASSESS THE EFFECTIVENESS OF HOTLINES AND PROVIDE EMPLOYEE COMPLIANCE TRAINING
        11. INDEPENDENT COUNSEL SHOULD REPORT THE STATUS AND RESULTS OF THE INVESTIGATION
        12. INTERNAL WHISTLEBLOWERS SHOULD RECEIVE MEANINGFUL MONETARY REWARDS
        13. THE WHISTLEBLOWER POLICY MUST BE COMMUNICATED EFFECTIVELY
        14. THERE SHOULD BE MILDER SANCTIONS FOR WHISTLEBLOWERS INVOLVED IN ILLEGAL GROUP ACTIVITY
        15. RETALIATION CLAIMS SHOULD BE INDEPENDENTLY INVESTIGATED
        16. THE DIRECTOR OF CORPORATE COMPLIANCE SHOULD BECOME THE EYES AND EARS OF THE INDEPENDENT DIRECTORS
        17. MAJOR DOs AND DON'Ts FOR CEOs
        18. NOTES
    13. Part Four: Statutory Incentives and SEC Award Regulations
      1. Chapter Eight: The False Claims Act: Qui Tam Cases
        1. WHAT IS A FALSE CLAIM?
        2. FALSE CLAIMS ACT BOUNTIES
        3. U.S. DEPARTMENT OF JUSTICE MEMORANDUM
        4. STATUTE OF LIMITATIONS
        5. NOTES
      2. Chapter Nine: IRS Whistleblowers
        1. SECTION 7623(b): MANDATORY WHISTLEBLOWER AWARDS
        2. REDUCTION OF AWARD PERCENTAGE
        3. SECTION 7623(a): DISCRETIONARY AWARDS
        4. FORM 211
        5. IRS WHISTLEBLOWERS AWARDS
        6. IRS AWARD DETERMINATIONS
        7. AWARD ADMINISTRATIVE PROCEEDINGS
        8. APPEAL TO TAX COURT
        9. DURATION OF PROCESS AND AWARD PAYMENT
        10. CONFIDENTIALITY OF WHISTLEBLOWER
        11. RIGHT TO COUNSEL
        12. IRS CONTRACTS
        13. DISQUALIFICATION OF U.S. TREASURY DEPARTMENT FEDERAL EMPLOYEES
        14. NOTES
      3. Chapter Ten: Other Statutory Incentives and Protections for Whistleblowers
        1. ACT TO PREVENT POLLUTION FROM SHIPS
        2. FALSE PATENT MARKING STATUTE
        3. U.S. TARIFF ACT OF 1930
        4. STATE FALSE CLAIMS STATUTES
        5. WHISTLEBLOWER PROTECTIONS
        6. BARKER V. UBS
        7. OTHER STATUTORY WHISTLEBLOWER PROTECTIONS
        8. NOTES
      4. Chapter Eleven: A Step-by-Step Guide to SEC Whistleblower Awards under Dodd-Frank
        1. SUMMARY
        2. SEC INVESTOR PROTECTION FUND
        3. DOES THE WHISTLEBLOWER NEED AN ATTORNEY?
        4. STEP-BY-STEP GUIDE
        5. DETERMINING WHETHER THE OVER $1 MILLION THRESHOLD IS SATISFIED
        6. DETERMINING THE AMOUNT OF AN AWARD
        7. MUST AN EMPLOYEE COMPLY WITH THE COMPANY'S INTERNAL COMPLIANCE PROGRAM?
        8. CONFIDENTIALITY
        9. NONWAIVER OF WHISTLEBLOWER RIGHTS
        10. APPEALS
        11. ANTI-RETALIATION PROVISION
        12. NOTES
    14. Appendix One: IRS Form 211
    15. Appendix Two: SEC Form TCR—Tip, Complaint or Referral
    16. Appendix Three: SEC Form WB-APP —Application for Award for Original Information Submitted Pursuant to Section 21F of the Securities Exchange Act of 1934
    17. Appendix Four: SEC Whistleblower Rules
      1. § 240.21F-1 GENERAL
      2. § 240.21F-2 WHISTLEBLOWER STATUSAND RETALIATION PROTECTION
      3. § 240.21F-3 PAYMENT OF AWARDS
      4. § 240.21F-4 OTHER DEFINITIONS
      5. § 240.21F-5 AMOUNT OF AWARD
      6. § 240.21F-6 CRITERIA FOR DETERMINING AMOUNT OF AWARD
      7. § 240.21F-7 CONFIDENTIALITY OF SUBMISSIONS
      8. § 240.21F-8 ELIGIBILITY
      9. § 240.21F-9 PROCEDURES FOR SUBMITTING ORIGINAL INFORMATION
      10. § 240.21F-10 PROCEDURES FOR MAKING A CLAIM FOR A WHISTLEBLOWER AWARD IN SEC ACTIONS THAT RESULT IN MONETARY SANCTIONS IN EXCESS OF $1,000,000
      11. § 240.21F-11 PROCEDURES FOR DETERMINING AWARDS BASED UPON A RELATED ACTION
      12. § 240.21F-12 MATERIALS THAT MAY FORM THE BASIS OF AN AWARD DETERMINATION AND THAT MAY COMPRISE THE RECORD ON APPEAL
      13. § 240.21F-13 APPEALS
      14. § 240.21F-14 PROCEDURES APPLICABLE TO THE PAYMENT OF AWARDS
      15. § 240.21F-15 NO AMNESTY
      16. § 240.21F-16 AWARDS TO WHISTLEBLOWERS WHO ENGAGE IN CULPABLE CONDUCT
      17. § 240.21F-17 STAFF COMMUNICATIONS WITH INDIVIDUALS REPORTING POSSIBLE SECURITIES LAW VIOLATIONS
    18. About the Author
    19. Index