Congress needs to pay greater rewards to whistleblowers who provide original information about white collar crime, U.S. Attorney General Eric Holder said in a speech at the New York University School of Law on Wednesday. Holder urged legislative changes to the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA), which currently caps whistleblower payouts to $1.6 million. Holder called the maximum award “paltry” in a financial industry that paid out $26 billion in bonuses last year and median executive pay was $15 million.
By contrast, the federal False Claims Act allows whistleblowers who report fraud committed against the government, such as falsely billing Medicaid or lying about contractor expenses, awards a percentage of an ultimate recovery, which may be much larger than $1.6 million. Attorneys with The Cochran Firm, D.C. provide vigorous legal representation in qui tam cases with the goal of securing the highest possible award to whistleblowers. In his remarks, Holder expressed a wish to reconcile FIRREA with the False Claims Act’s generous whistleblower payouts with the goal of stamping out Wall Street and financial sector corruption.
“This could significantly improve the Justice Department's ability to gather evidence of wrongdoing while complex financial crimes are still in progress — making it easier to complete investigations and to stop misconduct before it becomes so widespread that it foments the next crisis,” Holder told the crowd of lawyers, law professors, and other professionals. “This could significantly improve the Justice Department's ability to gather evidence of wrongdoing while complex financial crimes are still in progress — making it easier to complete investigations and to stop misconduct before it becomes so widespread that it foments the next crisis.”
Attorney General Holder noted that the Department of Justice has aggressively used the FIRREA to obtain large settlements with JPMorgan, Citigroup, and Bank of America. Providing the DOJ with the legal tools to reward whistleblowers could even help prevent the next financial crisis, he said. In order to proactively combat white collar corruption that has the capability of creating economically-destructive crises, he said individuals must be properly incentivized so that they will come forward and cooperate with ongoing investigations.
At The Cochran Firm, D.C., we support Attorney General Holder’s stated goal of aligning FIRREA with the False Claims Act’s whistleblower rewards. In order to combat fraud in the lucrative financial sector, the law needs to properly incentivize internal whistleblowers to step forward.