If It Ain’t Broke, Don’t Fix It!

(This post is written by attorney James Young.)

Bert Lance, former Director of the Office of Management and Budget in 1977 under President Jimmy Carter, is credited with popularizing the phrase, “If it ain’t broke, don’t fix it!” in the May 1977 issue of the magazine Nation’s Business. The phrase was aimed towards government’s habit of fixing things that aren’t broken, while not fixing things that are.

This phrase is epitomized by the SEC’s recent proposed amendments to its whistleblower program. The new rules could potentially limit the size of award a whistleblower would be entitled to if they brought forth a successful qui tam action. Under the current program, whistleblowers receive anywhere from 10 percent to 30 percent of any recovery made by the SEC based on information provided by the whistleblower. This program, as it stands now, has been wildly successful and has led to over $1.4 billion – with a b – in financial recoveries by the government.

Whistleblower rewards provide a necessary incentive to those who stake their careers and livelihood by coming forward to report fraud and illegality.  Keeping those rewards proportionate to the whistleblower’s contribution to a case is vital in order for the government to continue seeing the blockbuster recoveries it has seen over the past years.

The proposed change, which was passed by a vote of 3-2 by the Commissioners of the SEC, could keep the very people who the SEC relies on to alert them to wrongdoing from coming forward. The Commission would be given discretion as to what “the value of the whistleblower’s information and the personal and professional sacrifices in reporting the information.” Thus, rather than use an unbiased proportional percentage of any recovery as they do now, the proposed change would let Commissioners decide what is too large of an award for those awards over $30 million.  These Commissioners have likely never been through what a whistleblower goes through when coming forward. Commissioner Kara Stein, who voted against the proposed amendments, said that “practically speaking, this means the Commission could reduce the reward if, in its sole discretion, it thinks the award is too large.”

The professional and personal implications of reporting the illegal conduct of an employer should not be ignored by SEC policy makers. Working side by side with our clients to fight fraud provides perspective on the hardships that sometimes come with blowing the whistle. It is only right that the government reward brave individuals who bring illegal behavior to light without potentially arbitrary restraints on the size of that reward.

We encourage rulemaking that recognizes the vital role SEC whistleblowers played and continue to play in the recovery of billions of dollars for the federal government. We strongly encourage the SEC to shelve this proposed amendment to the agency’s whistleblower program and properly reward those brave individuals who come forward and report the kind of illegality that the government would not know of otherwise. If it ain’t broke, don’t fix it!

Regardless of this discouraging move by the SEC, we encourage whistleblowers of all types to contact us with their concerns of suspected illegal conduct that defrauds the government. We stay committed to seeking the maximum allowable recovery for our clients under the applicable whistleblower laws.  When it comes time to blow the whistle, choose a firm that is interested in getting you, the brave individual coming forward with information, the reward you deserve for your role in the government’s recovery.