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Protecting Whistleblowers since 1977

Congress Needs to Speak Up with Regard to Financial Whistleblower Retaliation

John Guy, August 04, 2014

“If you see something, say something." If you’re traveling around Washington, DC, whether it be on the Metro or while taking in the views of the monuments, you'll encounter that motto on billboards everywhere. If you see something, say something. Alert the authorities, and reduce the threat of a potentially catastrophic event before it’s too late.

One is left to wonder what could have happened in 2008, back when the banks were “too big to fail," if that motto was plastered in breakrooms and distributed in pamphlets to employees of the country’s largest financial institutions. What could have been prevented if employees weren’t fearful of losing their jobs for speaking out against rampant fraud? Instead, the motto around those breakrooms was more along the lines of “If you see something, look away or else.”

The truth is, many financial-sector employees did see something back then. They saw falsified documents, questionable mortgage loan practices, and more. Years of fraud, all in the name of improving the company’s bottom line. And they attempted to say something. They alerted their superiors and sent emails higher up the chain of command. So what happened?

The Securities and Exchange Commission (SEC) Office of the Whistleblower reports that a “significant number” of whistleblowers attempt to report their concerns internally. But leading up to the financial crisis, not only did these concerns fall on deaf ears – the employees reporting them were silenced. Whistleblowers were demoted, saw their responsibilities reduced, and were even fired and threatened with lawsuits. Perhaps that is why it is estimated that 30% of employees who have witnessed some sort of fraud choose not to speak out. After witnessing the troubles their coworkers experience, they choose not to risk their jobs and livelihoods.

The Association of Certified Fraud Examiners found that 46% of all fraud is uncovered through tips. When tips are the leading method of initial fraud detection, the importance of an “if you see something, say something” workplace culture is paramount. Yet, four years after the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) was enacted and the SEC Office of the Whistleblower was created, studies show a rise in whistleblower retaliation. In 2013, theEthics Resource Center found that the number of employees who reported misconduct and faced retaliation as a result had nearly doubled since 2007. Financial institutions are finding legal loopholes to bypass whistleblower protections created in Dodd-Frank. New forms of gag-orders are being placed on employees, keeping them from even speaking to their lawyers about the fraud they are witnessing.

So, what can Congress do? Congress has jurisdiction over banking accountability, and it has a responsibility to ensure that the SEC is adequately protecting employees that report corporate misconduct. For starters, Congress should be working closely with the SEC through oversight hearings and regular informational briefings to ensure that Dodd-Frank whistleblower protections are being interpreted as it intended.

By now, Congress has seen something. GAP is spearheading a campaign with Labaton Sucharow to alert more than 150 congressional members to the growing risk of whistleblower retaliation by financial institutions. In partnership with a coalition of more than 50 organizations and companies – representing nearly two million citizens and 250 groups – we have alerted Congress to the dangers of whistleblower retaliation by financial institutions. Now it is our elected leaders’ turn to say something.

John Guy is a Legislative Associate Intern for the Government Accountability Project, the nation's leading whistleblower protection and advocacy organization.