The Charlotte Business Journal interviewed Stephen M. Kohn, Executive Director of the National Whistleblowers Center, for an article released today. The article examines how more and more banks are adopting whistleblower programs through which employees can raise compliance concerns. Why? Kohn explains that the banks are afraid that their own employees will turn to outside attorneys to seek rewards under the Dodd-Frank Act.
Regular readers here will know that employees are the number one source of information leading to the detection of fraud. Kohn says that fear of losing a job is the top reason employees don’t speak up about their concerns if they see trouble. The Dodd-Frank Act is therefore serving the interests of whistleblowers and investors in two ways. First, it includes direct legal protection for whistleblowers so they can hold their employers liable in the event of any retaliation. Second, the whistleblower reward is so terrifying for employers that they are now actively competing with law enforcement. They are trying to promote their own internal whistleblower programs as the better place for employees to report compliance concerns. That is a good thing.