One upside from the pandemic and associated lockdowns, according to the article in the url below, is an increase in workplace related whistleblowing:"
The proof is in the data, with the U.S. Securities and Exchange Commission receiving 6,900 tips alleging white-collar malfeasance in the fiscal year that ended Sept. 30, a 31% jump from the previous 12-month record. Officials at the agency, which pays whistle-blowers for information that leads to successful investigations, say the surge really started gaining traction in March when Covid-19 forced millions to relocate to their sofas from office cubicles."
It seems that the enforced social distance has lowered employees' inhibitions about voicing their concerns:
"The isolation that comes with being separated from a communal workplace has made many employees question how dedicated they are to their employers, according to lawyers for whistle-blowers and academics. What's more, people feel emboldened to speak out when managers and co-workers aren't peering over their shoulders."
Of course, the lowering of employees' inhibitions may also have been aided by the financial rewards associated with those reports that lead to a successful prosecution:
"Since the pandemic hit the U.S., the agency has paid out some $330 million in awards, including an eye-popping $114 million to a single tipster in October. While the payments are tied to SEC investigations that almost certainly predate coronavirus, the amount of money going out the door is unprecedented in the decade since the regulator started its whistle-blower program."
For firms, of course, this heightened risk merely increases the value of having effective ethical cultures and compliance programs:
"For corporations, the rise in tips risks triggering a consequence from work from home that will last long after employees return to the office. Even if few of the tips lead to SEC enforcement cases, companies could still be dealing with years of compliance distractions as the agency launches investigations, subpoenas documents and grills senior executives."
But, while the pandemic appears to have sharpened our ethical antennae, the pathway that led to the elevated reporting levels currently being recorded appears to be the financial rewards that the SEC was empowered to offer as part of 2010 Dodd-Frank Act:
"Under the program, tipsters can receive financial awards if they voluntarily provide unique information that results in an enforcement action. Payouts can range from 10% to 30% of the money collected in cases where sanctions exceed $1 million. Awards are paid from a fund set up by Congress -- not money owed to harmed investors."
It seems that the prospect of a large payout may be more persuasive than either an ethical conscience or the inability to live with the guilt of knowing you have witnessed wrongdoing:
"Leveraging whistle-blowers has become one of the SEC's most potent tools for rooting out financial crime, despite the fact that most of the tips the SEC receives don't lead to enforcement cases. Information has come from more than 100 countries, with whistle-blowers providing evidence such as texts, emails and recorded calls."
Take care
David
David Chandler
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Whistle-blowing Soars to Record with Americans Working from Home
By Matt Robinson and Benjamin Bain
January 12, 2021
Bloomberg
