And at the Whistle, They're Off

Now, however, it seems that Congress has changed its mind: Instead of relying on companies to examine their own behavior with the help of anonymous employee submissions, the new Dodd-Frank Wall Street Reform and Consumer Protection Act establishes a system of whistleblower bounties and mandatory disclosures. Not only does the Act alter the manner in which companies will handle their own compliance and disclosure obligations; it radically changes the incentives for employees to report directly to the government, and along with the new proposed SEC rules, may dramatically change the way issuers conduct internal investigations. Dodd-Frank also introduces an important new player into the game ' the plaintiff's attorney. The likely result is an increase in the number ' but not necessarily the quality ' of reports to the SEC and a decrease in company-driven internal investigations and voluntary disclosures.