The reaction to the Frank-Dodd financial reform bill recently signed into U.S. law received mixed reviews, with many saying it was a cave-in to the lobbyists. But one aspect of it appears to be quite bold in terms of addressing abuses within the industry: the whistle-blowing provision now in effect that offers large cash rewards to those who report fraud and other wrongdoing at publicly traded corporations and investment banks.
Under the applicable sections, anyone whose whistle blowing leads to a successful SEC prosecution will be able to collect between 10% and 30% of the amount recovered (for cases above $1 million). With past settlements over the $50 million mark, the pay-offs could be huge, well into the millions of dollars. And with such an incentive, it would not be surprising to see a lot of people picking up the phone. And who knows, maybe there could in coming years be a series of news reports on the skullduggery uncovered.
The Frank-Dodd billalso protects whistleblowers against retaliation. If they are fired, demoted or otherwise harassed, they can file an action in the U.S. District Court to get their job back with double back pay and legal costs covered. In addition, the reporting process is not limited to company employees; academics, private investors and even journalists/securities analysts whose research uncovers fraud could collect awards.
So, could Canada benefit from a similar whistleblower law? Would it even have a chance of being enacted?