Former Rep. Michael Oxley (R., Ohio), author of the Sarbanes-Oxley Act of 2002, slammed a key provision of the Dodd-Frank Act on Wednesday, saying it encourages potential whistleblowers to pursue a “lottery” type payout.
Oxley spoke about a range of issues at a breakfast in New York, but he criticized the whistleblower program created by the Dodd-Frank Act for going beyond what his law encouraged by driving potential informants to the government rather than incentivizing them to report their concerns internally.
“Our idea was better,” Oxley said.
The Sarbanes-Oxley whistleblower program works better because it encourages companies to have effective compliance systems in place to mitigate potential penalties from the Securities and Exchange Commission or the Justice Department, Oxley said.
Dodd-Frank “raised the ante dramatically,” he said, encouraging employees to bypass their employer to get a payout from the SEC. Under the SEC program, a whistleblower can receive a reward of 10% to 30% of the penalty if it exceeds $1 million. The program has thus far issued only one reward.