[co-authors: Natasha Zahid, Mohammed Tartir]
Whistleblower Statutory and Regulatory Regimes
in the US, UK, and UAE
- Introduction
The term “whistleblower” generally refers to a person who anonymously reports suspected corporate misconduct to their employer or to law enforcement or regulatory authorities. This article focuses primarily on current uncertainties in the US relating to the future of government whistleblower programs, and recent developments in the UK and UAE relating to whistleblowers.
II. Whistleblower Programs and Laws in the US
SEC Whistleblower Program. The US Securities and Exchange Commission (SEC) launched its whistleblower program in August 2011. SEC rules define a “whistleblower” as “a person who voluntarily provides the SEC with original information in writing about a possible violation of the federal securities laws that has occurred, is ongoing, or is about to occur.” In order to qualify for an award, the information must lead to a recovery exceeding USD 1 million. SEC rules also include measures to protect whistleblowers from retaliation. As of the end of fiscal year 2023, the SEC had paid awards totaling USD 1.9 billion to nearly 400 whistleblowers.
In 2011 testimony before the US Senate Banking Committee, Paul Atkins, the new SEC Chair, expressed concern that the then-new whistleblower program might create “perverse incentives,” including frivolous tips and lessening the incentive for companies to create effective corporate compliance programs. However, there is no indication that such “perverse incentives” have occurred under the SEC whistleblower program. It remains to be seen whether there will be any changes to the program under the new Administration.
The DOJ Whistleblower Pilot Program. In August 2024, the US Department of Justice (DOJ) announced a “pilot program” to provide financial awards to eligible whistleblowers who provide “original, truthful information about criminal misconduct relating to one or more designated program areas that leads to forfeiture exceeding USD 1,000,000 in net proceeds.”
The “designated program areas” are: (i) foreign bribery and corruption cases where the wrongdoer is not an SEC reporting company; (ii) crimes involving financial institutions; (iii) bribery of government officials in the US; and (iv) health care fraud involving private insurers. As the program is only a few months old, DOJ has not yet announced any whistleblower rewards.
The False Claims Act (FCA). The FCA is the federal contracting fraud statute. It permits a private person (known as a “relator”) to file a lawsuit on behalf of the United States, under seal, if that person has information that the named defendant has violated the FCA. DOJ must investigate the allegations, and may either intervene in or decline to intervene in, or move to dismiss, the case. When the government obtains a recovery, the relator is entitled to receive 15 to 30 percent of the proceeds, depending on whether DOJ intervened in the suit. Since 1988, FCA whistleblowers have received USD 1.4 billion in payments.
- United Kingdom Whistleblower Laws & Incentives
The UK does not have a unified whistleblower protection program, relying instead on a patchwork of approaches by various government agencies. The Employment Rights Act 1986 (ERA) and the Public Interest Disclosure Act 1998 (PIDA) provide certain protections to whistleblowers.
To qualify for protection under these Acts, an employee must make a “qualifying disclosure” – specifically, one that involves: (i) a good-faith belief that the information is true and not motivated by personal gain; and (ii) a reasonable belief that wrongdoing has occurred. Employees may report to their employer, a legal adviser, a Minister of the Crown (or an individual appointed by an enactment by a Minister of the Crown), or other prescribed persons.
Employers of whistleblowers are prohibited from subjecting them to any detrimental act or omission, and also from dismissing or selecting them for redundancy if the decision was even partly motivated by the employee’s protected disclosure. An employee who has suffered retaliation may obtain compensation.
Measures to reward whistleblowers are inconsistent across UK government agencies. The UK’s Competition and Markets Authority (CMA) and HM Revenue and Customs (HMRC) have reward schemes in place, although the HMRC provides no formal guidance regarding its whistleblower reward process. In November 2024, the UK Serious Fraud Office (SFO) announced that it was drafting policy proposals regarding the payment of financial incentives to whistleblowers. The SFO has not yet released the draft proposals or provided an estimated date for doing so.
- United Arab Emirates Whistleblower Laws
Whistleblower protections within the UAE are structured in the financial free zones, namely the Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM).
Any registered entity in the DIFC is required to disclose contraventions of the Operating Law, its regulations, or other specific legislation. The law protects employees who make disclosures in good faith from legal or contractual liability, other civil remedies, and dismissal or victimization by their employer. Employers who violate these protections may face penalties of up to USD 30,000.
Whistleblowers qualify for protection by reporting violations to the Dubai Financial Services Authority (DFSA) or other authorized entities. The DIFC Regulatory Law requires employers to maintain the confidentiality of whistleblowers and prohibits retaliation against employees who report misconduct, regulatory breaches, or criminal activity in good faith.
The ADGM introduced its Whistleblower Protection Regulations in 2024. Key elements include: (i) protection of individuals who report breaches of ADGM legislation or financial crimes in good faith; (ii) requiring employers to provide an anonymous reporting option; and (iii) providing non-retaliation protection for employees who report misconduct.
Despite these advancements, legal barriers, such as fear of retaliation (including job loss), defamation laws, and workplace discrimination, continue to hinder whistleblowing in the UAE. Additionally, concerns about reputational damage to both the whistleblower and the organization can discourage reporting.
V. Conclusion
Many of the developments discussed above bear close watching this year. In the US, we will see whether DOJ continues its whistleblower pilot program and whether the SEC will change its whistleblower reward scheme. In the UAE, it will be interesting to see how the new ADGM Whistleblower Protection Regulations will be enforced. We may also see the UK’s FSA announce a reward plan for whistleblowers.
The US, by far, has the broadest range of whistleblower reward programs, which are designed to create stronger incentives for reporting and offset the personal risks that a whistleblower often confronts. Critics claim that payment schemes obscure the moral imperative to disclose wrongdoing and increase the risk of false reports. However, numerous empirical studies have found no evidence that such incentives increase false reporting.
Especially in view of the new regulations enacted in 2024 in the ADGM, it is clear that protecting whistleblowers is an imperative shared by all of the jurisdictions discussed in this article.
- SEC Rule 21F-2.
- SEC Rule 21F-7. The SEC has been actively pursuing violations of Rule 21F-7. In January 2024, the SEC announced a record USD 18 million civil penalty against JP Morgan Securities, asserting that the use of release agreements with retail clients impeded the clients from reporting securities law infractions to the SEC, in violation of Rule 21F-7.
- “Net proceeds” means the monetary proceeds remaining after victims of the crime have been compensated.
- Article 47 of Federal Decree Law No. 33 of 2021 Regulating Labor Relations provides that if an employee’s complaint of arbitrary dismissal is upheld (e.g., for filing a case against the employer that is proven to be true), the employee is entitled to receive compensation. In addition, defamation is a criminal offense under the UAE Penal Code, punishable by up to two years of imprisonment or a fine of up to AED 20,000 (USD 5,450).
