The Financial Times published the following letter to the editor written by Phillips & Cohen partners Erika A. Kelton defending the SEC whistleblower program.
Most whistleblowers have 'clean hands'
Sir, It was disappointing to read two FT stories where no effort was made to answer critics' specious arguments aimed at weakening the newly created whistleblower reward programme for the Securities and Exchange Commission before it is barely off the ground ( "US to pay big sums for Wall St tip-offs" and "Tip-off law set to spark bounty hunts", August 9).
The programme will "encourage malicious whistleblowing", predicts one critic, while another makes the wild assertion that "whistleblowers almost never have all of the facts right and almost never have clean hands". Both are flat wrong.
Based on more than 20 years' experience representing whistleblowers, we know that prosecutors will not waste their time investigating whistleblower claims that are not documented with solid evidence. We also know that most whistleblowers are fired from their jobs or are blackballed in their industries because they have "clean hands" and try to stop wrongdoing, rather than get their hands "dirty".
The US government has recovered more than $20bn through a 1986 whistleblower programme to uncover Medicare fraud, defence contractor fraud and other types of fraud against the government.
The new SEC programme in the Dodd-Frank financial overhaul law certainly will recover billions more and, more importantly, deter securities law violations that cost investors billions.
Erika A. Kelton
August 11, 2010