Definition

whistleblower

A whistleblower is a person who voluntarily provides information to the general public, or someone in a position of authority, about dishonest or illegal business activities occurring at an organization. This organization could include a government department, a public company or a private organization.

In recent years, government regulatory bodies, including the U.S. Securities and Exchange Commission, have encouraged people to report compliance violations by offering financial awards. The Dodd-Frank Act, for example, contains a provision in which whistleblowers that report high-quality, original security violations to the SEC are eligible to receive 10% to 30% of the money collected in a case when the information provided leads to more than $1 million in sanctions. In November 2012, the SEC reported that it had received more than 3,000 tips in the first year of its whistleblower program under the Dodd-Frank Act.

The Internal Revenue Service also gives monetary rewards to people who provide information on persons who fail to pay taxes. If the IRS uses information provided by the whistleblower, it can award the whistleblower up to 30% of the additional tax, penalty and other amounts it collects.

Because whistleblowers often face reprisal from the organizations they are reporting, laws have been designed to protect them. The Whistleblower Protection Act of 1989, for example protects federal government employees from retaliatory action for reporting illegal or dishonest activities at a federal agency.

Contributor(s): Ben Cole
This was last updated in November 2012
Posted by: Margaret Rouse

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