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Whistleblowers are people who report the illegal or fraudulent actions of their employers, and they’ve been a part of the business world for centuries. Some people see whistleblowers as heroes for their bravery and integrity, while others loathe them for their disloyalty. Legislation to protect and encourage these informers has changed business and the way it operates in theUnited States, in both positive and negative ways. (To read more, check out Infamous Insider Traders.) The History of Whistleblowing
In the United States, whistleblowers attained their first protections in 1863, under the False Claims Act. The purpose of the act was to bring to light fraud by government suppliers. Whistleblowers received a portion of the funds recovered by the government.
In 2002, the Sarbanes-Oxley Act enhanced these initiatives in order to prevent more large-scale business failures, such as Enron and Worldcom. Those who reported improper acts were protected from dismissal or other reprisals by their employers. Publicly-traded companies were required to set up internal procedures to allow employees direct and confidential access to the company’s audit committee, and outlined the steps the committee was required to take to investigate and remedy the issues.
In 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act increased both incentives and shielding for whistleblowers working for companies that report to the Securities Exchange Commission.
This story was originally published by Investopedia.