It has taken a long time but the status of whistleblowers has reached an all time high. Whistleblowers can expect even more encouragement and protections in the future.

What is the reason for this? Does greater reliance on whistleblowers reflect a lack of confidence in traditional law enforcement tactics?

The Obama Administration’s aggressive enforcement program has been built on a number of principles which are all aimed at rooting out white collar crime. The False Claims Act relator program stands as one of the most effective mechanisms for rooting out fraud in government programs.

Congress recognized the importance of whistleblowers and created important whistleblower protections as part of Sarbanes-Oxley. Nearly eight years later, Congress created the new SEC whistleblower program in the Dodd-Frank Act. The IRS has established its own whistleblower program. Congress has recently enacted new protections for whistleblowers, S.743, The Whistleblowers Protection Act, which is awaiting President Obama's signature.

Whistleblower programs will mature outside of the False Claims Act context. It will take some time but companies need to plan for a more robust whistleblower program for securities violations. The SEC recently disclosed that it recieved over 3000 whistleblower compliants last year. That number will increase next year as the program continues to mature.

Aside from the legal framework, whistleblowers are reaping rewards. The SEC recently awarded $50,000 to a whistleblower to stop a multi-million dollar fraud. More significantly, the IRS paid Bradley Birkenfeld $104 million for his assistance against UBS for its role in shielding US account holders from tax liabilities in overseas accounts. Birkenfeld’s assistance led to UBS agreeing to a $780 million fine.

The SEC whistleblower program is the new “kid” on the block. In contrast to the other whistleblower programs, the SEC program provides financial incentives and protections, such as anonymous reporting by attorneys. SEC rewards are keyed to the overall recovery by the SEC against the violator. False Claims Act and IRS payments to whistleblowers are keyed to the amount of the fraud or tax evasion, not necessarily to the amount of a recovery.

More importantly, the SEC whistleblower program provides the broadest anti-retaliation protections for whistleblowers. As a result, whistleblower attorneys will take advantage of the SEC program and try to bring more cases in the SEC program.

Companies have to plan for increased whistleblower reports. At a minimum, companies have to maintain robust internal reporting, hotlines and other monitoring programs.

In addition, and as I have advocated, companies need to establish whistleblower triage programs to review and identify whistleblower complaints of merit. Once identified, companies need to respond strategically by quickly gathering facts to assess the risks from a complaint, and to decide on a course of action which may include self-disclosure to the SEC.

It is a new era and companies have to accept the new realities of whistleblower risks.