According to Halbert, Ingulli, & Frey (2015), whistleblowers are people who decide to report unethical or illegal activities, usually activities under the control of their employers. They may be working for private companies, nonprofit organizations, or for the government. A whistleblower is an individual working in an organization who decides to expose the misconduct, misbehavior, or illegal actions occurring in that organization. Making the decision to expose these actions can be very difficult to disclose with the fear of repercussion. The information being disclosed to supervisors or the media can either be inside or outside their organization.
There are a number of organization or groups out there that are concerned with issues in organization and when a whistleblower is exposing corruption, those groups make themselves available for the whistleblower to make their allegations. Usually when whistleblowers are exposing corruption they are speaking out to expose the dangers that may be happening to the public or with the environment. Most often the alleged misconduct being exposed by the whistleblower is violation of the laws and regulations. There has also been some reports of misconduct be exposed for the health and safety violations, and fraud.
Key Characteristics of a Whistleblower
A Whistleblower is honest and fearless; he or she has to be courageous and brave enough to expose misconduct. Tenacity and a fighting spirit is a requirement because whistleblowing can be a long a drawn out process and a difficult road to bear. The individual has to be determined to go all the way no matter the consequences. We mention that a whistleblower must have tenacity, reasoning for the characteristics is because they will be under public scrutiny, co-workers will avoid them, and before and justice is obtained, there will be long tiring and vigorous legal battles. The most significant key characteristics is being able to combat retaliation. Employers will threaten to fire or suspend a whistleblower, being able to combat retaliation will help in this fight. J.P. Morgan Chase & Co. is a publicly traded company that has been in the news for whistleblowing in the last 12 months.
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In March of 2014, the New York Federal Court awarded Keith Edwards, a former employee of J.P. Morgan, $64 million dollars for his part in the Whistleblowing of a case that defrauded the U.S. government. J.P. Morgan Chase & Co., were submitting false claims to U.S. government to insure flawed home loans (Stempel, 2014).
For more than a decade, JP Morgan Chase & Co. submitted thousands of mortgages for insurance by the Federal Housing Administration or the Department of Veterans Affairs that did not qualify for government guarantees. J.P. Morgan admitted to failing to report to agencies that their internal reviews revealed problems also.
During the year 2003 through 2008 Keith Edwards was the Assistant Vice President of a government-insuring unit with J.P. Morgan. During his tenure, Mr. Edwards believed that Wall Street and his own company J.P. Morgan Chase & Co. were being deceitful in their actions. Mr. Edwards wanted to show that companies involved in deceitful action should be held accountable for their actions, he became known as a whistleblower for his actions. In 2008 J.P. Morgan fired Keith Edward for action in exposing their organization. As the result of Mr. Edwards exposing the misconduct of J.P. Morgan, the company settled violations in the amount of approximately $614 million for violation of the False Claims Act.
Justified in Reporting
I believe that the whistleblower in the case of J.P. Morgan was justified I his actions of reporting the companies misconduct and unethical behavior. As an employee of any organization it is our duty to report any unethical behavior to the proper authorities being committed by an organization. It becomes our civic duty as American citizens to report misconduct. According to Halbert, Ingulli, & Frey (2015), whistleblowers react first and must worry about the reach of “public policy” later. Characteristically unable to remain passive in the face of what they believe is wrong, they speak out.
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Protection under the Sarbanes-Oxley Act
According to Halbert, Ingulli, & Frey (2015), in 2002 Congress passed corporate fraud reform legislation with whistleblower provisions protecting those who report financial misconduct in publicly traded companies. This law is known as Sarbanes-Oxley, or SOX. This law was introduced from the incidents or scandals from the major firms known as Enron and Worldcom. According to the SOX Act whistleblowers of publicly traded companies are protected even former employees are protected when the activity they were involved in occurred during their employment.
According to Marchall & Williams (2007), SOX protects employees of publicly traded companies and their subcontractors. The definition of “employee” is broad under the statute, and generally includes present and former workers, supervisors, managers, officers, and even independent contractors. The law also allocates liability to companies and to individuals that have spearheaded retaliation against whistleblowers. The SOX Act prevents discrimination against employee or what we call whistleblower who provides information that assists in investigation of misconduct or an organization that violates federal security laws.
Halbert, T., Ingulli, E., & Frey, M. A. (2015).
Law and ethics in the business environment with readings from essentials of contract law. Mason, OH: Cengage Learning. Marshall, D.J., & Williams, N.J. (2007).
Blowing the whistle on accounting fraud: the Sarbanes-oxley whistleblower protections act at a glance. A White Paper for Finance Professionals. Katz, Marshall & Banks LLP. Retrieved on April 22, 2015 from http://www.cfo.com/media/pdf/SOX%20Whistleblower%20White%20Paper_KMB.pdf Stempel, J. (2014).
Jpmorgan whistleblower gets $63.9 million in mortgage fraud deal. Retrieved on April 22, 2015 from http://www.reuters.com/article/2014/03/07/us-jpmorgan-whistleblower-idUSBREA261HM20140307
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