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Revisiting the case for a UK whistleblower reward programme

April 11, 2024

Almost two years have passed since the UK Economic Crime Manifesto was published, igniting the controversial debate over a potential whistleblower reward scheme in this country. Momentum on this topic gradually ground to halt since, until new Director of the UK Serious Fraud Office (SFO) Nick Ephgrave outlined his plans for “a more pragmatic, more proactive” approach in a February 2024 speech. As part of his objective to speed up SFO cases, Ephgrave stressed the importance of information collected at the outset of an investigation and returned to the idea of paying whistleblowers, to reap the benefits seen in the US system.  

We argued in favour of a UK whistleblower reward scheme last year, and regretted that the government’s 2023 Economic Crime Bill ultimately chose not to include the whistleblower proposals made in the 2022 manifesto by the All Party Parliamentary Groups (APPGs) on Anti-Corruption and Responsible Tax, and Fair Business Banking. Inspired by Ephgrave’s renewed interest, we take a fresh look at the extent to which the UK is lagging US counterparts who have such policies.

Whistleblowing can strengthen investigations

Whistleblower information may not always prompt an investigation, but it may expand the scope of charges and help advance existing investigations in meaningful ways. In the case of the record-breaking $279 million awarded by the US Securities and Exchange Commission (SEC) to a single whistleblower in May 2023, Chief of the SEC’s Office of the Whistleblower Creola Kelly made this point. The award more than doubled the previous $114 million record, issued by the SEC in October 2020.

Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, said that the size of the $279 million award “not only incentivizes whistleblowers to come forward with accurate information about potential securities law violations, but also reflects the tremendous success of our whistleblower program”.

Large awards reflect the value of reporting in the US

In 2023, the SEC awarded nearly $600 million - the highest annual total by dollar value in the program’s history - to 68 individual whistleblowers. This brought the SEC’s total figures since 2011 to $1.9 billion worth of awards to 397 individual whistleblowers.

In addition, the SEC received a record number of 18,354 whistleblower tips alleging wrongdoing in 2023, almost 50% more than the previous record of 12,322 in 2022. The chart below shows the exponential rise in the past few years.

Source: SEC Office of the Whistleblower

The US Internal Revenue Service (IRS) has also seen a positive trajectory – albeit less drastic:

Source: IRS Whistleblower Office 2022 Report; IRS Whistleblower Office 2021 Report.

In comparison, the UK Financial Conduct Authority received 1,086 whistleblowing reports in 2022 and 580 in the first half of 2023. While this was a positive step of approximately 12% more than the first half of 2022, there is still a stark contrast between the SEC and IRS figures.

Despite the controversy, it cannot be ignored that financially rewarding whistleblowers has increased the number of reports and successful investigations. US regulators are so reliant on such programs that Deputy Attorney General Lisa Monaco announced the US Department of Justice (DOJ) plans to launch a new whistleblower rewards program later this year.

What next for the UK

Ephgrave seems to be taking the first few steps in a long journey towards establishing whistleblower rewards in the UK. Since his February speech, he has had meetings to discuss potential collaboration with the US Attorney’s Office for the Southern and Eastern Districts of New York and the US Department of Justice, Criminal Division.

Although the Competition Markets Authority and Her Majesty’s Revenue and Customs already offer financial incentives, this idea has met resistance from the Financial Conduct Authority and from previous SFO directors in the past. In the background, the UK Government has been conducting a review of the current whistleblower framework since last year and is expected to publish its findings in the near future. Could this provide the momentum that Ephgrave needs to guide the SFO into following the DOJ example?

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