Importance of Dodd-Frank Act to Whistleblowers

COURT

Dodd-Frank Wall Street Reform and Consumer Protection Act (also known as “the Act’ or “Dodd-Frank”) was enacted on 21 July, 2010 under President Barack Obama’s regime for the purpose of revitalising US financial regulatory system. Dodd-Frank aimed at restoring public confidence during the global financial crisis. But despite the existence of competent investigators and an array of statutes to reduce fraud, corruption in both government and non-government agencies has been a major challenge to economic growth and corporate governance. Basically, the Act safeguards US economy from corrupt or unethical practices in public/private establishments[1].

Although Dodd-Frank has been a success story, the increasing number of fraud cases before and during COVID-19 as well as their huge financial cost to the government indicates whistleblowers are still a critical part of the solution to good corporate governance. Importantly, government employees vested with the responsibility of uncovering fraud are ineligible as whistleblowers, thus, they are not entitled to compensations. Dodd-Frank therefore shows that the US government understands the importance of whistleblowers in exposing fraud in private/public corporations and is taking measures to properly reward as well as protect whistleblowers in line with Section 922 of the Act.

The statute also provides job protection through its anti-retaliation provisions which allow for a jury trial when whistleblowers feel their employment has been wrongfully terminated. A successful “qui tam” lawsuit usually attracts reinstatement and back pay, including attorney fees. Public corporations and their private subsidiaries are subject to these Dodd-Frank whistleblower laws. On this backdrop, employees in public and private corporations who notice wrongdoings should consult an attorney for professional advice on the best approach to air their concerns, and for proper legal actions if employers take retaliatory actions against them.

  • Research gaps to be filled

Most people identify unethical practices in organisations but lack appropriate knowledge of the specific law that should apply, including whistleblower rights, protection and remedies. But whistleblowing policies and protection differ among countries, and is sector/industry specific, depending on whether the employee works in a private or public establishment. However, if employees understand the appropriate steps to take when reporting suspected wrongdoing, it is most likely that companies/employers will follow when they believe you are taking the ethical route. On this premise, and in line with findings from reviewed literatures, the researcher will attempt to:

  • Simplify Whistleblower Directives for both employers/companies and employees to ensure understanding of whistleblowing policies and knowledge of protected disclosures, including how coming forward with evidence of fraud, waste, or abuse by a government agency can improve corporate governance.
  • Prove that results from Scheetz and Wall[2] are invalid and inapplicable on a global basis due to lack of insufficient country-specific data used in the study. Additionally, differences in governance structures, efficiency of legal frameworks and level of understanding/commitment from employees make generalization of findings unacceptable.
  • Furthermore, the research by Moore et al[3] was flawed because the authors failed to scrutinize the link between good corporate governance and whistleblowing. This is a focal point in this proposed research.
  • Despite the results from Mintz’s[4] study, his choice of a holistic approach limits the thoroughness of the investigation, thus, raising questions on its validity. This comparative study on the UK and USA safeguards against such avoidable erroneous outcomes.
  • Additionally, the use of qualitative research enhances understanding of corporate governance phenomena, particularly because both governance theory and governance reform are best analysed with qualitative research data. This study will add to the body of knowledge by adopting a qualitative research approach on whistleblowing and corporate governance.
  • This research will also analyse different types of disclosures, explain who can be considered a whistleblower, and present procedures to be followed while making disclosures or filing claims for retaliatory actions from employers.
  • Lastly, results from the hypotheses testing will provide a new ground for further inquiries in the field of corporate governance and whistleblower legislations.

Although Dodd-Frank has been a success story, the increasing number of fraud cases before and during COVID-19 as well as their huge financial cost to the government indicates whistleblowers are still a critical part of the solution to good corporate

*Irobiko Chimezie Kingsley is an academic writer on www.meziesblog.com and he is available for academic writing services such as Thesis, Dissertations, Research Proposals, Personal Statements etc.

References


[1] Whistleblower Protection Act of 1989 [Public Law 101-12, Approved April 10, 1989, 103 Stat. 16, As Amended in 5 U.S.C. Ch. 12 § 1201 et seq.].

[2] As per 16

[3] As per 20

[4] As per 22