In down economic times are employees willing to blow the whistle on workplace misconduct or are they holding on to their jobs and noses as they ignore unethical business practices?
This was a question pose recently by a survey conducted by Labaton Sucharow LLP. According to the survey, 34% of employees in theUSare aware of wrongdoings in the workplace and of this group 78% would report misconduct.
This is an interesting statistic given that in other recent surveys over half of US workers indicate that they would be willing to take another job if given the opportunity. Obviously blowing the whistle is a direct way to deal with workplace misconduct. The question is whether those employees who are looking to greener pastures will file complaints as they exit the door and what this means for post recession business recovery, small team-based work culture competitiveness and entrepreneurism during the post recovery growth spurt.
The high number of alleged employees willing to abandon ship suggests to me that recruiting and hiring new employees will cause many companies to falter during a post recession rally. If responding to employee complaints and whistle blowing are added to post recovery dynamics, it is possible we will see a high number of business takeovers, mergers and by-outs favoring progressive workforce dynamics.
Here are some additional findings from the Labaton Sucharow Ethics and Action Survey.
A significant number of Americans have knowledge of market manipulation, corporate disclosure and financial statement violations and offering fraud. This is not good news for big business and their stockholders.
With significant financial rewards and strengthened anti-retaliation and anonymity protections offered under Dodd-Frank, an overwhelming 78% of respondents indicated they would report wrongdoing in the workplace if it could be done anonymously, without retaliation and result in a monetary award. In fact, more than one-third (34%) of respondents knew about wrongdoing in the workplace. However, 68% were unaware that the Securities and Exchange Commission (SEC) has a new Whistleblower Program designed to protect and reward individuals who report violations of the federal securities laws.
Jordan Thomas, partner and head of the Whistleblower Representation Practice at Labaton Sucharow commented: “It is disheartening to see that wrongdoing in the workplace continues to be so widespread. However, the findings affirm the need for, and value of, the SEC’s Whistleblower Program. This program, in concert with other regulatory reforms, has the potential to dramatically enhance investor protection and restore public faith in the markets.”
A former Assistant Director in the SEC’s Division of Enforcement, Thomas played a leadership role in crafting the Whistleblower Program enacted under Dodd-Frank. The program offers strong anti-retaliation protections and financial awards of 10-30% of monetary sanctions collected at the conclusion of a successful enforcement action. In mid-November, the SEC issued a report regarding the operation of the program to date. As highlighted by the report, since the SEC established a whistleblower hotline in May, it has received over 900 calls from members of the public.
Further, during the seven-week period between the time the final whistleblower rules went into effect and the agency’s fiscal year end September 30, 2011, the SEC received 334 whistleblower reports alleging a wide spectrum of securities violations such as “market manipulation, corporate disclosure and financial statements and offering fraud.” If this trend continues, the number of whistleblower submissions is likely to exceed the number of cases that the Enforcement Division actively investigates at any one time.
Does this mean that untrustworthy executives will survive the onslaught unscathed?
Here are some additional findings:
- 79% of respondents would encourage a loved one to report wrongdoing if he/she could do so anonymously, be protected from retaliation, and receive a monetary award;
- Women were more inclined to encourage a loved one to be a whistleblower (82%) than men (75%);
- 49% of respondents with annual household income between $75,000-$100,000 reported that they had observed, or had knowledge of, misconduct at work. Interestingly, this percentage dropped to 29% for those respondents with a household income above $100,000;
- 37% of White/Caucasian respondents said they have observed or had knowledge of wrongdoing in the workplace, while that figure dropped to 33% for Black/African-American respondents and 22% of Hispanic respondents;
- 83% of those surveyed between the ages of 45-54 would report misconduct if done anonymously, were protected from retaliation and with monetary award. However, only 74% of respondents at an earlier age in their career, aged 18-34, would report, even with those protections;
- 68% of Americans surveyed are unaware of the new SEC Whistleblower Program. There was an eight point spread between men and women with respect to knowledge of the SEC’s whistleblower program, 64% and 72% respectively;
- Regionally, 66% of Americans in the South versus 71% of respondents living in theMidwestare unfamiliar with the program. Further, 67% of metropolitan residents compared to 72% of non-metropolitan residents are unfamiliar with the program.
“In strengthening protections and incentives for whistleblowers, the federal government recognized that law enforcement authorities cannot effectively and efficiently police the marketplace without the assistance of private individuals and entities,” continued Thomas. “Accordingly, now, more corporations will establish a culture of integrity in their organizations and individuals will courageously report wrongdoing wherever they find it.”
From a TIGERS perspective, organizations that nurture trust, interdependence, genuineness, empathy, appropriate risk, and success have little to worry about.
To request a full copy of Labaton Sucharow’s Ethics & Action Survey, please email email@example.com.
About Labaton Sucharow LLP
Labaton Sucharow LLP, with offices in New York, New Yorkand Wilmington, Delaware, is one of the country’s premier law firms comprehensively representing businesses, institutional investors and consumers in complex securities and business litigation. It is consistently among the top plaintiffs litigation firms based on its rankings in Chambers & Partners, The Legal 500, The National Law Journal’s Plaintiffs’ Hot List, and Benchmark Plaintiff. The Firm has been a champion of investor and consumer rights for close to 50 years, seeking recovery of current losses and necessary governance reforms to protect investors and consumers.
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