The act of whistle-blowing, especially on Wall Street, is “not for the faint-hearted,” author William Cohan wrote in a Financial Times column Friday.
The article was based on interviews Cohan conducted with several lawyers and, more significantly, three men who had reported suspicions of wrongdoing to their former employers—JPMorgan Chase, Deutsche Bank, and Lehman Brothers—only to suffer as a result of their actions.
In addition to relating the men’s stories and contacting the companies in question for comment, Cohan also interviewed several people with expertise on the subject of whistle-blowing, including former New York governor and attorney general Eliot Spitzer.
“The pushback against the status quo in any context is extraordinarily difficult,” Spitzer told Cohan. “It is not merely Wall Street. It is a phenomenon that exists within large institutions that have significant power—Wall Street, government, among them. There is this overwhelming rigidity in organizations that makes them hesitant to believe. When money is involved, the powers are very, very significant. Those people who pushback on Wall Street are often made to pay a penalty.
They’re fired. They’re blackballed. It is a cultural issue which we have to deal with.”
Cohan also considers the effectiveness of the whistle-blowing provisions contained in the Dodd-Frank Act of 2010. Though critics say that the law provides yet another means for firms to simply pay fines for wrongdoing and move on, one of Cohan’s sources that the Act has in fact provided valuable protections for whistleblowers, and provided whistleblowers with more incentive to come forward, in protection and monetary reward.
Dennis Kelleher, a former attorney at Skadden, Arps, Slate, Meager & Flom and now the CEO of Better Markets, Inc., a Washington-based non-profit organization, told Cohan: “The most important thing is to incentivize whistle-blowers to come forward, and all the incentives previously were dramatically stacked against whistleblowers, and it’s still an incredibly high-risk action,” he said. Although critics remain, he thinks the new whistle-blower provisions in Dodd-Frank strike the right balance. “I would be significantly more likely to encourage a whistleblower post-Dodd-Frank than pre-Dodd-Frank,” Kelleher said, according to Cohan.