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UK whistleblowers responsible for one in four overseas tip offs to US, says Kroll

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Whistleblowers from the UK were responsible for almost one in four overseas tip-offs to the US Securities and Exchange Commission (SEC) last year, according to analysis from global investigations firm Kroll Advisory Solutions.

SEC made its first payment to a whistleblower under the Dodd-Frank Act in August this year, releasing around $50,000 to an individual who helped an investigation that resulted in more than $1 million in sanctions.

Kroll claims that payouts such as these will encourage more whistleblowers to come forward to the US regulator in search of bounties, as the rewards on offer have no jurisdictional limits as long as the case has a negative impact on US financial markets.

Kroll's claims that of 3,001 tip-offs received in total in the past year, 324 came from outside the US. Whistleblowers based in the UK were responsible for 74 of these, more than any other country and substantially more than Canada, which is in second place with 46 tip-offs, 14% of all those from outside the US.

Benedict Hamilton, a Managing Director at Kroll, said: "The bounties offered to whistleblowers by the SEC are likely to have huge repercussions for companies, particularly international ones, as they mean whistleblowers based anywhere in the world are more likely to go to the regulator rather than their company in the hope of being awarded a large payout.

"At the moment UK regulators don't offer similar rewards but the Financial Services Authority has been asked to consider the approach by the Parliamentary commission on banking standards. We have already seen a sharp rise in whistleblowing tip-offs to the regulator in the last few years and the offer of rewards would almost certainly accelerate this trend.

"This reinforces the need for companies to have robust whistleblower procedures in place to find out about any malpractice being carried out by their employees as early as possible and react quickly to limit financial and reputational damage, and where appropriate, recover or avoid losses."