Expanding Whistleblower Programs Create Heightened Risks and Compliance Imperatives

Expanding Whistleblower Programs Create Heightened Risks and Compliance Imperatives

Whistleblowers play a critical role in exposing corporate misconduct. According to an article by Navex, regulatory bodies worldwide are strengthening protections and incentives for individuals who report wrongdoing. As whistleblower programs, such as those from the Securities Exchange Commission (SEC) and the Department of Justice (DOJ), gain momentum, companies without strong internal compliance mechanisms face heightened risks.

The SEC’s whistleblower program, operational since 2011, has awarded over $2.2 billion, with $255 million distributed in FY 2024 alone. The program offers confidentiality, anti-retaliation protections, and significant financial incentives, attracting reports worldwide. While whistleblower tips to the SEC have plateaued at approximately 11,000 annually, 38% of award recipients were external to the organizations reported, including competitors and market observers.

The DOJ’s newly launched Corporate Whistleblower Pilot Program (CWPP) further escalates enforcement risks. The program targets violations such as Foreign Corrupt Practices Act infractions and private healthcare fraud and offers rewards of up to $30 million for tips leading to successful forfeitures. However, companies must act quickly. Issues discovered internally must be reported within 120 days to qualify for leniency, placing immense pressure on compliance teams.

The article suggests a robust internal reporting framework is essential to mitigate risks. Many whistleblowers turn to regulators due to distrust, fear of retaliation, or ineffective internal mechanisms. Companies must prioritize:

• Strengthening internal reporting channels to ensure accessibility and trust.
• Conducting timely investigations with clear whistleblower communication.
• Enforcing anti-retaliation policies to encourage internal disclosures.
• Reviewing policies to remove barriers to external reporting.

Likewise, effective internal investigations are now imperative for business. Companies must efficiently triage, investigate, and resolve allegations while demonstrating transparency. Metrics—such as reporting volumes, resolution times, and outcomes—help assess effectiveness. Striking the right balance between transparency and discretion is key to protecting both corporate integrity and regulatory compliance.