L4: Whistleblowing Flashcards
define a whistleblower
a person who informs of unlawful or immoral activity by another person or organization.Typically these activities benefit the individual or organization but harm society.
Benefits of whistleblowing
avoids harming customers or society. Honest. Effective communication
Drawbacks of whistleblowing
Bite the hand that feeds you, could be motivated by revenge, increased risk of bank runs due to contagion. could affect unrelated institutions.
what legal protection is there for whistleblowers in UK, US and EU
accessible reporting channels, obligation of confidentiality, prohibition of retalliation.
what regulation is there and any rewards in UK
in UK, Public Information Disclosure Act 1998. Compensation is given if unemployment or injury to feelings.
give examples of whistleblowing case studies/examples.
Wells Fargo GrEight, Metro Bank accounting scandal, Deutsche Bank money laundering scandal.
What was Wells Fargo GrEight
Employees encouraged to open 8 accounts a day, so faked new accounts to hit targets. 2011-2015, employees opened 1.5m deposit accounts, with 565k credit card accounts unauthorized. Many customers were charged fees on accounts without knowing. Fined $185m in 2018, only 3% of their Q2 profits.
What was the Metro Bank accounting scandal 2019
Miscategories a large number of commercial loans, meaning they did not hold sufficient capital against them. Did not inform investors of this once they realised. 54% decline in share price.
What was the Deutsche Bank money laundering scandal
Recived $186m fine in 2023 for failing to fix problems that had been flagged involving money laundering controls. Failed to make changes fast enough and were still exposed to same problems.
Who was the whistleblower in the Deutsche Bank money laundering scandal
Val Broeksmit. Used his dead stepfathers passwords to reveal Deutsche’s role in money laundering and dealings with Russia and Trump. Rewarded for cooperating with FBI by helping get VISA for his girlfriend. Found mysteriously dead.
Barclays Whistleblowing scandal
Chief executive Jes Staley fined $650k for attempting to reveal identity of whistleblower, exposing a new hire who was a friend and former colleague of his. In 2020, he resigned over the investigation of his relationship with Jeffrey Epstein.
Reward for Deutsche Bank LIBOR whistleblower
Received $200m with info helping UK and US regulators investigate manipulation of global interest rates. Largest ever payout by CFTC.
what regulation is there and any rewards in US
reward of 10-30% of money collected by SEC sanction.
what regulation is there and any rewards in EU
no rewards, just protection.
