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Whistleblowing, and How It Pays

August 30, 2024 | 1 minutes reading time | By L.A. Winokur

Regulators increase rewards for enforcement assistance; SEC reports “unprecedented” public participation.

When Clifford Rossi, a veteran of several senior risk management positions, joined Citigroup in 2007, he was told “per the general counsel’s office” to have “no contact” with an officer tagged as a whistleblower.

“I learned this was a guy who, for at least a couple of years, had flagged all sorts of problems in the mortgage business and had been pushed aside and shunned,” Rossi recalled. “They didn’t want to hear from him.”

In 2008, the senior colleague brought his allegations to regulators, recounted Rossi, then Citi’s Consumer Lending Group chief risk officer, now a University of Maryland professor-of-the-practice.

And “it turned into a firestorm.”

Threat of Damage

Whistleblowing is now established – and legitimized in post-financial crisis regulations – as a potent contributor to bringing misconduct to light and levying penalties. But it is also a risk that, if allowed to escalate, can do significant damage to, if not destroy, a company, its culture and reputation.

Companies that have adopted in their governance processes codes of conduct and provisions for lodging whistleblower-type complaints would prefer to keep their...

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Topics: Conduct & Ethics

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