Whistleblower reports of misconduct by financial companies in the United Kingdom increased slightly in the past year, according to new data.
Kroll, an investigations and management firm, obtained data from the Financial Conduct Authority that showed the total number of whistleblowing reports the FCA received in 2019 rose 3.5 percent over the previous year, marking the highest number of whistleblower reports the FCA has seen since 2015.
Whistleblowing reports to the FCA related to workplace culture issues saw the biggest increase: a 35 percent jump from 2018 to 2019.
A growing awareness of unacceptable business practices may be encouraging whistleblowers to report their concerns, Benedict Hamilton, managing director at Kroll, told the Financial Times, which reported Kroll’s findings.
“Stories of executive misconduct or dysfunctional corporate culture have been a common feature of news headlines . . . ,” Hamilton said. “As a result, employees may be more confident about reporting inappropriate behavior in the workplace.”
The whistleblower case involving Barclays CEO Jes Staley received a lot of attention, although the response of UK regulators was heavily criticized as too weak. In 2018, the FCA and the Prudential Regulation Authority fined Barclays CEO Jes Staley $870,428 for twice attempting to uncover the identity of a whistleblower who raised concerns about Staley’s decision to hire a former colleague at JPMorgan Chase.
Positive coverage of whistleblowing more broadly also may have contributed to the willingness of more UK whistleblowers to report their concerns.
Whistleblowers are playing crucial roles in stopping fraud in the financial services industry, particularly in the US, where the Securities and Exchange Commission considers its whistleblower program a crucial tool for enforcement.
The rise in whistleblower reports in the UK is encouraging, but it is likely unsustainable without the system of incentives in place in the US. UK regulators’ failure to offer rewards to whistleblowers are a significant weak point in fighting fraud, and recent cases highlight the need for the UK and other countries to consider rewarding whistleblowers for the risks they take.
In addition to confidentiality and protection from retaliation, the US SEC offers whistleblowers rewards equivalent to 10 to 30 percent of the sanctions the government collects when the amount exceeds $1 million.
The SEC whistleblower program’s rewards have been enormously successful in encouraging whistleblowers to come forward. In fiscal year 2018, the SEC saw a record number of whistleblower reports, peaking at 5,282 – an 18 percent jump over the prior year.
While reporting has since slightly dropped, the SEC has ramped up its pace of awards, announcing 11 whistleblower awards totaling nearly $64 million in 2020.
Whistleblowers in other have flocked to the SEC with reports of misconduct by entities under US jurisdiction. In fiscal years 2018 and 2019, 129 UK whistleblowers have submitted reports to the SEC.
Phillips & Cohen represented the whistleblower who received the largest SEC award to an international whistleblower so far – more than $32 million.
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