November 6, 2010
I have several concerns with the Whistleblower rewards program:
1. Besides a specified percentage, there should be a monetary cap on rewards, or the value should be based on the amount of the fraud at the time the whistleblower became aware of the fraud. This is necessary to prevent a whistleblower from sitting on information as a fraud continue in order to receive a potentially larger reward.
2. It is important that those who are aware of a security fraud, and have an affirmative duty to report it, are not rewarded from foing what they are obligated to do. This should include not only lawyers, accountants and compliance professionals, but managers, HR folks and the like as well.
3. If a whistleblower benefited from the fraud (e.g., recevied a bonus from profits), any whistleblower reward should be reduced by the amount.
4. There should be a provision to prvoide whistelblowers with a certain level of immunity to they extent they might be loosely affiliated with the fraud.
5. Make sure any payments to whistleblowers are provided to the IRS and any award recipeint gets a Form 1099.
6. There needs to be a public service campaign to make folksaware of the awards program and whistleblower protections.