Saturday 1 October 2016

Ireland's first US whistleblower millionaire: is it only a matter of time?

We don't pay whistleblowers for helping regulators - but the SEC will pay serious money for info on US corporate wrongdoing

Greg Glynn and Emma Dunne

Published 15/05/2016 | 02:30

The number of tips received has increased year on year. In 2012, 3,001 tips were received, with $46,000 paid out in rewards. By 2015, the number of tips received had increased to 3,923 - with $37m paid to whistleblowers.
The number of tips received has increased year on year. In 2012, 3,001 tips were received, with $46,000 paid out in rewards. By 2015, the number of tips received had increased to 3,923 - with $37m paid to whistleblowers.

Unlike in the US, whistleblowers in Ireland do not generally receive financial rewards. But Irish individuals with information on corporate wrongdoing in US organisations can benefit from the US whistleblower programme. Is it just a matter of time before we see Ireland's first whistleblower millionaire?

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The Dodd-Frank Wall Street Reform and Consumer Protection Act became federal law in the US in 2010. The Act recognises the valuable role whistleblowers can play in uncovering and prosecuting corporate wrongdoing by offering significant financial incentives to encourage whistleblowers to come forward.

Under the Act, individual whistleblowers who provide "original information" on corporate wrongdoing to the Securities Exchange Commission (SEC), which leads to the wrongdoer being fined $1m or more, may be awarded between 10pc-30pc of the amount of the fine.

Whistleblowers can submit information alone or jointly with another individual. The information must be "original" (that is to say not known to the SEC from any other source), and must come from the whistleblower's independent knowledge or analysis.

Significantly, the whistleblower does not have to be an employee of the organisation in question. The information is submitted directly to the SEC's Office of the Whistleblower, which was established to administer the program.

Whistleblowing: the figures

The Office of the Whistleblower has described the whistleblower programme as a "game changer" in the enforcement of federal securities laws and the protection of investors and the marketplace.

The number of tips received has increased year on year. In 2012, 3,001 tips were received, with $46,000 paid out in rewards. By 2015, the number of tips received had increased to 3,923 - with $37m paid to whistleblowers.

The Irish angle

The majority of the tips received come from within the United States. However, it is becoming increasingly common for tips to originate from individuals based outside the US. Overall, tips from Ireland are on the rise: from 9 in 2012 to 20 in 2015 (the sixth highest from any country outside the US that year). To date, the SEC have received 51 tips from Ireland in total.

The future

The programme has the potential to yield huge pay-outs. In September 2014, over $30m was paid to one non-US based whistleblower.

As US foreign direct investment in Ireland continues its upward trajectory (particularly in knowledge-based, service-led activities such as financial services), so does the potential for Irish individuals to engage with, and potentially uncover incriminating information regarding, US corporations.

Given this, and bearing in mind the undeniable draw of these potential awards, it may just be a matter of time before we see Ireland's first whistleblower millionaire.

Greg Glynn is a partner and head of litigation and dispute resolution at Arthur Cox solicitors. Emma Dunne is an associate at the firm

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