In a January 27, 2014 article penned by Rachel Louise Ensign in the Wall Street Journal (Risk and Compliance Journal) titled “Why 2014 Could be Huge for Corporate Whistleblowers,” Steven Pearlman, partner and co-head of Proskauer’s Whistleblower Practice Group, commented on the need for employers to encourage employees to lodge complaints internally without fear of retribution. Pearlman suggested that companies give consideration to whether a bonus tied to the benefit the employee conferred upon the company, or letter of appreciation recognizing an employee’s reporting efforts, may fit the bill. Putting the value of providing such incentives in context, the article discussed an anticipated uptick in external whistleblowing reports in 2014, noting that SEC “officials have promised more big bounties soon,” and that the DOJ secured $3.8 billion in False Claim Act settlements and judgments during FY2013. In addition, a January 5, 2014 Wall Street Journal article authored by Jennifer Smith forecasting big ticket items for general counsels in 2014 notes the implications of the SEC whistleblower bounty regime, and includes Pearlman’s observations that “[s]ome may worry that employees are looking for a quick lottery ticket” in utilizing the SEC whistleblower bounty program. And on December 30, 2013, Ashby Jones’ blog post on WSJ.com quoted Pearlman regarding the impact of the SEC bounty payouts in 2013. Pearlman explained that “[b]ig numbers beget tips, and tips turn into lawsuits and investigations.”
As we have noted in other blog posts and video interviews, we can expect to see whistleblower tips, bounties and litigation continue to increase and pose significant risks to employers in 2014.