The law firm Davis Polk has published whistleblower data showing the limited success whistleblowers have in collecting awards.  Davis Polk, in its paper titled “Recent Developments in Whistleblower Protections: Legal Analysis and Practical Implications,” reports that only 20 of the 1846 Sarbanes-Oxley whistleblower actions filed with the Department of Labor since 2005 have been completed with a finding of “merit” and approximately 100 are listed as “settled.”  Regardless, Davis Polk argues that the whistleblower protections under Sarbanes-Oxley, Dodd-Frank, and the CFPA, have a behavioral effect on regulated entities (and their vendors) because of reputational risk as well as the fear that the SEC will use whistleblower claims as leverage in regulatory proceedings: “We would accordingly expect perceived retaliatory conduct to significantly affect the risk and settlement value of regulatory investigations, raising the stakes far beyond the statutorily defined civil remedies.”   Davis Polk also argues that the whistleblower statutes have a chilling effect on employers when dealing with problem employees.

OUR TAKE: Compliance officers should implement some of the practical advice that Davis Polk offers to address whistleblower claims.  These include strong internal investigation and reporting mechanisms, employee hotlines, and consistent HR review policies.