Attorney General Eric Holder wants to raise the award limits for Wall Street whistleblowers, citing the need to provide greater incentives to blow the whistle. In a speech he gave yesterday at New York University, Holder said whistleblowers provide critical information to investigators in prosecuting cases, but the incentives provided to certain whistleblowers are simply insufficient.
Holder’s complaint centers on the reward scheme under the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA), which deals with fraud committed against investors, and has a maximum award for providing tips of $1.6 million. In Holder’s opinion, this is “a paltry sum” in an industry that handed out over $26 billion in bonuses just last year. Holder said that, “in this unique environment, what would — by any normal standard — be considered a windfall of $1.6 million, is unlikely to induce an employee to risk his or her lucrative career in the financial sector.”
Holder urged Congress to amend FIRREA to potentially match the reward scheme in place under the False Claims Act, in which whistleblowers can receive up to thirty percent of the government’s recovery. Urgency is necessary, Holder said, pointing to a “troubling return” to the same kind of behavior that he said helped bring on the 2008 financial crisis.
Raising incentives, he said, “could significantly improve the Justice Department’s ability to gather evidence of wrongdoing while complex financial crimes are still in progress — making it easier to complete investigations and to stop misconduct before it becomes so widespread that it foments the next crisis.”
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