Our friends at O’Melveny have outlined new proposed Consumer Financial Protection Bureau (CFPB) legislation that would mirror rewards from the Securities and Exchange Commission’s (SEC) whistleblower program.
As I wrote one year ago, reward numerations and protections are most important to effective whistleblower programs because the persons that come forward often face severe personal and professional risk of doing so. The financial benefit and freedom from harassment and retaliation must be substantial enough to incentivize persons with information regarding criminal and corrupt activity to report it.
O'Melveny continues with helpful guidance regarding investigations:
"While any effective compliance program will be tailored to the needs and complexities of a particular corporation, all programs should contain several features. Below are some hallmarks of compliance programs that mitigate the risk of external whistleblower complaints:
- The program is in writing, well designed, with an effective process for receiving anonymous complaints, investigating those complaints, and resolving any issues identified both internally and with respect to third-party relationships maintained by the company.
- Sufficient resources, at the staff and management level, are allocated to design and operation of the program.
- Staff handling both intake and investigation of internal complaints are trained in the unique aspects that arise where claims of actual or potential retaliation are present.
- Procedures for submitting complaints are clearly and regularly communicated to personnel in writing and through training.
- Procedures are designed to facilitate employee confidence in a confidential and non-retributive claim submission and investigation process.
- Employees are provided incentives for complying with the program and/or disincentives for failing to comply.
- Investigative steps and outcomes are documented and conclusions are supported.
- Substantiated findings are communicated to appropriate corporate management, root analysis is conducted, and necessary changes to operations are implemented and documented.
- The program includes processes for frequently auditing and adjusting the complaints handling and compliance program."
On March 6, 2020, the Consumer Financial Protection Bureau (CFPB) proposed legislation that would require the Bureau to pay monetary awards to whistleblowers “who voluntary provide original information” that leads to “any judicial or administrative action brought by the Bureau that results in monetary sanctions exceeding $1,000,000.” Subject to implementing regulations, any person who provides such information could receive between 10 and 30 percent of “what has been collected of the monetary sanctions imposed in the action.” The exact percentage of the award would be determined by the CFPB according to criteria such as the “significance of the information” and the “programmatic interest of the Bureau.”