Financial Fraud Whistleblower Programs
*The newly minted FinCen whistleblower program allows for anonymous reporting, but regulations regarding the nuances of the program are still forthcoming.
IRS
Factors deciding whether a plaintiff whistleblower may proceed anonymously[1]:
Severity of threatened harm
Reasonableness of whistleblower fears
Vulnerability to retaliation
Prejudice to government
Public interest
A whistleblower may appeal a denial of an award anonymously, although the whistleblower cannot apply for an award anonymously.
– Whistleblower 14106-10W v C.I.R., 137 T.C. No. 15, 137 T.C. 183 (Dec. 8, 2011)
Allowed whistleblower to appeal IRS denial of award anonymously;
Key Facts:
Whistleblower had reasonable fears of retaliation, ostracism, economic duress and had acquired info in course of his employment
Public interest in knowing the whistleblower’s identity was weak because the IRS won the judgement on an issue that did not depend on the identity the whistleblower and the agency already knew the whistleblower’s identity
State Programs
Only five states have whistleblower award programs based on securities laws: Indiana, Montana, Utah, Vermont, and Washington. Of these, only Montana, Vermont, and Washington have explicit provisions allowing for a whistleblower to report anonymously.[2] However, these states requires that an anonymous whistleblower’s counsel disclose the identity of the whistleblower to the securities division in order to receive an award.
Utah does not include a specific provision allowing for an award to be given to an anonymous whistleblower, but does allow whistleblowers to be represented by counsel and contains provisions that information that could “reasonably identify” a whistleblower may not be disclosed by the securities division. Indiana requires that an informant include in their disclosure a signed statement asserting that the informant “reasonably believe[d]” that a violation of state securities law occurred.
*Indiana has anti-retaliation laws related to reports of workplace health and safety violations. See Ind. Code 22-8-1.1-38.1.
[1] 17 C.F.R. § 240.21F-9.
[2] 15 U.S.C. § 78u-6(h)(2)(A); 17 C.F.R. § 240.21F-7.
[3] 17 C.F.R. § 240.21F-7.
[4] 17 C.F.R. § 165.4.
[5] 7 U.S.C. § 26(h)(2); 17 C.F.R. § 165.4.
[6] 17 C.F.R. § 165.4.
[7] 26 C.F.R. § 301.7623-1(e).
[8] 26 C.F.R. § 301.7623-1(e).
[9] Doe v. United States, No. 19-720T, 2019 WL 3406800 (Fed. Cl. July 29, 2019)
[10] Mont. Code Ann. § 30-10-1105; Vt. Stat. Ann. 9 § 5617(d); RCW 21 § 21.40.030.
This piece was written by Devan Eaton, The Anti-Fraud Advocacy Fellow.
