Why whistleblowing works in USA

In the wake of the global financial crisis of 2008, the then US President Barack Obama took on the task of “cleaning up Wall Street” to protect small investors. And so the Dodd-Frank Wall Street Reform and Consumer Protection Act came into being, named after senators Christopher Dodd and Barney Frank.


This law gave more teeth for investor protection, expressly prohibited retaliation by employers against whistleblowers and provided a section for an award for the whistleblower. For information that implicate companies violating US laws, a whistleblower could get 15-30% of the penalty the government collects from the company. It also encourages whistleblowers from outside the US to give information about violation of US laws in a foreign country.


Before the Dodd-Frank Act came into force, whistleblowers could use the False Claims Act by filing a lawsuit against a company violating the law. If the lawsuit was successfully argued in court or settled by the company, the whistleblower could collect 15-30% of the fine amount, depending on if the government participated in the process or not. There are many US legal firms that now specialise in whistleblower lawsuits and help the informants fight the cases.

Dinesh Thakur, the former employee of Ranbaxy, was awarded about $47 million six years ago as reward on the basis of the False Claims Act after the US Department of Justice collected $500 million as penalty from the company.

In FY 2019 (October 1, 2018, to September 30, 2019), the US Securities Exchange Commission received its second largest number of whistleblower tips in a year and made its third largest award to date — a $37 million award to a whistleblower. In FY 2018, the SEC awarded $50 million to joint claimants and $39 million to a single individual. This year, the SEC received 27 tipoffs from India alone. It was the fourth largest tipoff coming outside of the United States.

In India, the Whistleblower Protection Act passed in 2014 is yet to become operational. Indian companies do have to set up a whistleblower mechanism, according to the norms of the Companies Act, 2013. Markets watchdog Sebi has recently introduced an awards system for informants.