HomeUK Citizens the Most Active Players Among Foreigners Providing Whistleblower Tips to U.S. Government

UK Citizens the Most Active Players Among Foreigners Providing Whistleblower Tips to U.S. Government

This article first appeared in JD Supra.

Ever since the establishment of the U.S. Securities and Exchange Commission’s (SEC) whistleblower rewards program, there has been a steady increase in the number of foreign whistleblowers coming to the U.S. government to report a whistleblower tip. According to SEC data, the United Kingdom ranks first in whistleblower tips provided to the SEC. From 2011 to 2021, the SEC received 5,044 whistleblower tips from foreign nationals, and 699 were from the United Kingdom.

The reasons many foreign nationals use the SEC whistleblower program are threefold:

Most importantly, these legal procedures are not exclusive to American citizens or residents. Foreign whistleblowers can also obtain anonymity and awards.

The UK’s central whistleblower law has long been criticized for inadequate protections for whistleblowers. Despite being the first European whistleblower law, UK’s Public Interest Disclosure Act (PIDA) not only has been a colossal failure for UK citizens, but it has also become one of the UK’s most dangerous exports as dozens of countries worldwide have used PIDA as a guide. In general, PIDA lacks the capacity to protect employees from retaliation. Employees even have to open their employment records and personal life to public scrutiny, resulting in severe retaliation and expensive and drawn-out court proceedings against their employer.

According to a report from the Thomson Reuters Foundation and Blueprint for Free Speech, PIDA is “powerless to stop managers and co-workers from retaliating,” the law “can enable and even institutionalize retaliation,” whistleblowers “are often put on trial themselves,” and employers commonly “level trumped-up allegations against whistleblowers.” After 20 years of disastrous outcomes, UK officials finally admit that PIDA is broken and needs to be replaced.

The British counterpart of the SEC, the Financial Conduct Authority (FCA), has also explicitly decided not to offer awards for any whistleblowing actions. The FCA actively recruits whistleblowers and recognizes the crucial role insiders play in policing financial crimes. However, despite mounting evidence to the contrary, the agency claims whistleblower awards are ineffective at incentivizing insiders to come forward. Therefore, more and more British citizens, incentivized by the large awards offered by the US whistleblowing laws, decide to utilize the SEC Whistleblower Program. An eligible SEC whistleblower, voluntarily reporting original information to the SEC, can earn an award of 10-30% of monetary sanctions collected in an action where the sanctions exceed $1 million. To date, the largest award for a single case was $114 million. Overall, the SEC has awarded over $1 billion to over 200 individuals.

Furthermore, unlike British PIDA, the Dodd-Frank Act offers more comprehensive protections to corporate whistleblowers. Whistleblowers in the US who file their information through an attorney can remain anonymous. Whistleblowers who suffer retaliation are protected by some of the strongest anti-retaliation provisions in the world. Thus, it is no wonder many foreigners come to the U.S. to expose their employers’ hidden crimes. An advanced legal system offering anonymity and whistleblower awards is crucial to the courageous individuals who are brave enough to stand up against powerful corporations and governments.

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