Shearman & Sterling LLP | Government Regulatory Enforcement Blog | German Financial Regulator’s Decision To Open Whistleblower Office Highlights International Focus On Protecting Whistleblowers<br >  
Government/Regulatory Enforcement
This links to the home page
  • German Financial Regulator’s Decision To Open Whistleblower Office Highlights International Focus On Protecting Whistleblowers
    On July 1, 2016, Germany’s Federal Financial Supervisory Authority (“BaFin”) announced the creation of a centralized office for whistleblowers to report regulatory violations. BaFin also noted in its announcement that it believed that protecting whistleblowers was a top priority.  Numerous regulators throughout the world have now created dedicated whistleblower offices, and BaFin’s efforts seem fully in line with this growing and impactful trend.

    The Securities and Exchange Commission’s (“SEC”) Office of the Whistleblower, for example, has been extraordinarily popular since it launched in July 2010.  The SEC’s program has awarded more than $85 million to 32 whistleblowers since its inception and received nearly 4,000 tips in its most recent fiscal year. Other regulators in the United States have whistleblower programs of their own, including the Internal Revenue Service (“IRS”) and the Commodities Futures Trading Commission. 

    BaFin’s whistleblower program demonstrates that formal regulatory encouragement of whistleblowing (and protection of whistleblowers against retaliation) is a global trend.  In recent years, several countries in Europe, including Austria, Belgium, Denmark, France, Hungary, Italy, Luxembourg, Malta, Romania and Slovenia, have joined the United States in taking steps to strengthen whistleblower rights. These programs have led to a number of prominent cases brought by a variety of regulators involving whistleblowers.  For instance, in 2012, Bradley Birkenfeld received $104 million from the IRS for revealing details about schemes allegedly used by UBS to aid wealthy Americans in evading tax obligations. That same year, Cheryl Eckard received $94 million from the U.S. Department of Justice for revealing alleged manufacturing faults by a British pharmaceutical corporation. In addition, on December 12, 2013, the Hungarian Competition Authority announced that a whistleblower had received an award of approximately $193,000 in connection with a tip that led to the prosecution of a scheme to coordinate prices in the stationary market.   

    As regulatory encouragement of whistleblowers has increased, so have efforts to protect whistleblowers.  In the United States, for example, the Dodd-Frank Act includes a provision that allows whistleblowers to sue for damages if their employers retaliate against them.  Several European countries have adopted legislation designed to protect whistleblowers as well.  This past March, a French judge ordered an investigation of a subsidiary of UBS Group AG for potentially interfering with a former employee who had reported allegations of tax fraud to the French authorities. Such legislation and judicial activity highlight the worldwide trend of protecting whistleblowers from retaliation as well as rewarding whistleblowers for providing information that leads to successful prosecutions.  
    CATEGORY: Whistleblower