When the government takes action against companies based on whistleblower tips, those Companies are subjected to penalties that, on average, are 63 percent larger than companies the government pursues independent of whistleblower involvement, according to a study Rachel Louise Ensign recently wrote about in the Wall Street Journal. The study, entitled The Impact of Whistleblowers on Financial Misrepresentation Enforcement Actions, analyzed the penalties for financial misrepresentation levied by either the U.S. Department of Justice (“DOJ”) or the U.S. Securities and Exchange Commission (“SEC”) from 1978 to 2012.
The study contained numerous other findings that illustrate the important role that whistleblowers play in government efforts to address corporate malfeasance. First, the study found that individuals who were convicted as part of a government prosecution of corporate misconduct that involved whistleblower tips received, on average, prison sentences that were approximately two and a half times longer than those individuals convicted without whistleblower involvement. The study further found that “whistleblower involvement accounts for 30% of $70.13 billion in total penalties assessed” over that roughly 35 year stretch.