News & Insights

New DOJ Whistleblower Program: Opportunities and Concerns

New Program Draws Inspiration from SEC’s Whistleblower Model, Experts Call for Adjustments to Enhance Program Effectiveness

The U.S. Justice Department has launched its first cash-for-tips pilot program in March 2024, aimed at encouraging whistleblowers to report financial crimes, bribery, and healthcare fraud. The program trial is set to run for three years and offers financial payouts to individuals who provide original information or analysis on certain crimes. While the initiative has been welcomed by many in the legal sector, some critics have raised concerns about potential flaws, such as the absence of a dedicated fund for paying whistleblowers and a $50 million award cap.

“Whistleblowers take enormous risks stepping forward, particularly in reporting the kind of wrongdoing targeted by DOJ’s new program,” said Erika Kelton, a partner at whistleblower law firm Phillips & Cohen. “By limiting the amount of an award, individuals may choose to stay silent, particularly because the larger recovery may also increase the risks.” (Quoted from WSJ article referenced below)

The program aims to bridge regulatory gaps and is modeled after the SEC’s successful whistleblower award program. There is a debate on whether the program’s structure and limitations may hinder its overall effectiveness in attracting valuable whistleblower tips.

Please reference this WSJ Article for further information: https://www.wsj.com/articles/whistleblower-legal-sector-welcomes-doj-pilot-program-but-concerns-remain-59fee162?mod=risk-compliance_feat2_new-rules_pos3