DOJ Launches New Whistleblower Pilot Program

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9 min read

In March 2024, we published an alert regarding Deputy Attorney General (“DAG”) Lisa Monaco’s announcement that the US Department of Justice (“DOJ” or the “Department”) intended to design and implement a new whistleblower incentive program.1 On August 1, 2024, DOJ launched the Corporate Whistleblower Awards Pilot Program (“Whistleblower Pilot Program” or the “Program”), a three-year pilot program that uses financial rewards to incentivize whistleblowers to report corporate misconduct to the Department.2 Under the Whistleblower Pilot Program, individuals are eligible to receive a monetary award when they provide to DOJ original and truthful information about criminal misconduct if that information is not already covered by another federal whistleblower program or statutory initiative, falls within a designated subject area, and leads to a successful criminal or civil asset forfeiture that exceeds $1 million in net proceeds. 

Notable Program Features 

The Whistleblower Pilot Program contains several notable features. 

  • Gap-filling among existing whistleblower programs. The Whistleblower Pilot Program is intended to supplement, not supplant, reporting avenues provided by existing federal whistleblower programs, such as those of the Securities and Exchange Commission (“SEC”), Commodity Futures Trading Commission (“CFTC”), or Financial Crimes Enforcement Network (“FinCEN”), or statutory initiatives, such as qui tam actions under the False Claims Act. As a result, to be eligible for an award under the Whistleblower Pilot Program, a whistleblower report must not be covered by another whistleblower program. DOJ encourages whistleblowers unsure about qualification under the Whistleblower Pilot Program to submit information to multiple programs. 
  • Focus on four subject matter areas. To be eligible for an award under the Whistleblower Pilot Program, a whistleblower’s information must relate to at least one of the following four areas of corporate crime: 
    • Violations by financial institutions and their employees and abuse of the financial system not covered by the FinCEN whistleblower program;
    • Corporate foreign corruption schemes not covered by the SEC whistleblower program, including violations of the Foreign Corrupt Practices Act, the Foreign Extortion Prevention Act, and money laundering statutes;
    • Corporate domestic corruption schemes including bribe or kickback payments to domestic public officials; and 
    • Federal health care offenses not covered by the federal False Claims Act, including offenses against private insurers and fraud against patients. 
  • 120-day window to report misconduct following an internal report. While the Whistleblower Pilot Program does not require whistleblowers to report misconduct internally before reporting it to DOJ, the Program encourages internal reporting by considering a whistleblower’s internal reporting prior to government reporting as a plus factor in calculating the whistleblower award. Whistleblowers who first report misconduct internally must report the misconduct to DOJ within 120 days of the internal report to be eligible for a financial award. 
  • Amendment to the Voluntary Self-Disclosure and Corporate Enforcement Policy (“CEP”). DOJ amended the CEP temporarily (to run contemporaneously with the Whistleblower Pilot Program) to allow a company that receives an internal whistleblower report to qualify for a “presumption of a declination” if the company self-discloses the report to DOJ within 120 days of receiving the internal report and satisfies the other applicable CEP requirements, namely, providing full cooperation and timely and appropriate remediation.3 Extending the presumption of a declination to a company that self-discloses misconduct within 120 days following receipt of an internal escalation, apparently including where the whistleblower expresses an intention to report the misconduct to DOJ, is a departure from prior DOJ practice. Under the version of the CEP in effect before the Program launch, DOJ would treat a corporate self-report following an internal escalation in which the whistleblower expressed an intention to report the misconduct to DOJ and/or SEC as made under “an imminent threat of disclosure or government investigation” and thus as “involuntary” and not able to qualify the reporting company for a presumption of a declination.4 
  • Treatment of whistleblowers. DOJ’s guidance regarding the Whistleblower Pilot Program encourages whistleblowers to report instances of company retaliation for whistleblower reporting. In addition, the Whistleblower Pilot Program Intake Form asks whistleblowers whether they experienced retaliation for or were impeded from reporting.5 DOJ’s guidance states that it will consider instances of corporate retaliation against whistleblowers and any attempts to impede a whistleblower from communicating to DOJ possible corporate criminal violations in determining company cooperation credit and in evaluating a company’s compliance program. DOJ may also bring criminal charges, including for obstruction of justice, against a company that retaliates against whistleblowers or impedes whistleblower reporting. 

Key Takeaways 

There are a number of takeaways for companies to consider.

  • Importance of effective internal reporting processes and prompt internal investigation. The Whistleblower Pilot Program seeks to encourage companies to implement and maintain, and for employees to use, internal reporting mechanisms. The advent of the Program thus presents an opportunity for companies to review, and refresh and reinforce as needed, their policies and procedures regarding internal reporting. Furthermore, because a whistleblower’s internal report triggers a 120-day deadline for both whistleblowers and companies to report the misconduct to DOJ to be eligible for a financial award or a presumption of a declination, respectively, companies have an added incentive to investigate whistleblower escalations promptly to assess their merits and to decide whether to self-disclose. 
  • Anticipated increase in whistleblower reporting, investigations, and enforcement actions. The Whistleblower Pilot Program fills gaps in existing federal whistleblower programs by extending financial incentives to whistleblowers to report information regarding criminal misconduct by companies previously not covered by another program, e.g., non-issuers engaging in conduct in violation of the FCPA. Together with DOJ’s Pilot Program on Voluntary Self-Disclosures for Individuals launched earlier this year, these programs provide powerful incentives to whistleblowers in the form of monetary rewards where a whistleblower did not participate meaningfully in the criminal activity reported or a non-prosecution agreement where the whistleblower was involved in the reported misconduct.6 Given these new incentives, we anticipate an increase in whistleblowing, investigations, and DOJ enforcement actions related to the priority areas set forth in both programs.
  • CEP amendment application to recidivism and misconduct involving other aggravating circumstances. The CEP, as amended, states that if a company self-discloses misconduct internally reported by a whistleblower within 120 days of receipt, “the company will still qualify for a presumption of a declination under the [CEP]…” Notably, companies that are recidivists or are otherwise involved in misconduct for which aggravating circumstances exist do not qualify for a “presumption of a declination” under the CEP.7 Although they can still qualify for a declination under the CEP, such companies must, among other things, meet more rigorous requirements for “immediate” self-reporting upon becoming aware of the “allegation of misconduct” and for “extraordinary” cooperation and remediation. The amended CEP’s use of the phrase “presumption of a declination” in connection with corporate self-reporting within 120 days following receipt of a whistleblower report thus suggests that DOJ does not intend for companies with aggravating circumstances, including recidivism, to be able to qualify for a declination in such circumstances. It remains to be seen how DOJ interprets and implements the CEP as amended in light of the Whistleblower Pilot Program. 
  • CEP amendment application to whistleblower reports that do not fall within the scope of the Whistleblower Pilot Program. The Whistleblower Pilot Program invites whistleblowers to submit information to multiple whistleblower programs if they are not sure which program applies. It is not clear under the current guidance whether a company can qualify for a presumption of a declination at DOJ if it self-reports misconduct within 120 days of receipt of an internal whistleblower escalation and the Department subsequently determines that the reported information is not covered by the Whistleblower Pilot Program. 
  • DOJ scrutiny of whistleblower treatment. In implementing the Whistleblower Pilot Program, DOJ will carefully evaluate company treatment of whistleblowers as the SEC does in connection with its Whistleblower Program. The SEC enforces Section 21F(h)(1) of the Securities Exchange Act of 1934, which prohibits employers from retaliating against whistleblowers, and Rule 21F-17 thereunder, which prohibits employers from impeding a whistleblower from reporting to the SEC a possible securities law violation (as covered in a prior alert).8 While the DOJ’s Whistleblower Pilot Program does not have supporting federal regulations prohibiting whistleblower retaliation and impeding whistleblowers from reporting concerns to authorities, DOJ’s guidance on the Program and the Program Intake Form both invite whistleblowers to alert DOJ of instances thereof, indicating DOJ’s intended vigilance in assessing company treatment of whistleblowers. As such, entities should review internal procedures and policies regarding anti-retaliation and whistleblower reporting. In particular, companies should ensure that written documentation (such as employee compliance manuals, codes of ethics, and employee-related agreements (including employment agreements, separation agreements, or settlement agreements)) cannot be read as impeding whistleblower disclosure of misconduct to the government (e.g., through agreement clauses prohibiting any disclosure of confidential information), or as suggesting retaliation against whistleblowing (e.g., through requiring notice to the company when reporting to a government agency), even where no intention to interfere with regulatory guidance exists and regardless of whether such language is enforced in practice. 

1  DOJ Announces Pilot Program to Pay Monetary Rewards to Whistleblowers, White & Case LLP (March 13, 2024), https://www.whitecase.com/insight-alert/doj-announces-pilot-program-pay-monetary-rewards-whistleblowers.  
2 US Department of Justice, Corporate Whistleblower Awards Pilot Program (August 1, 2024), https://www.justice.gov/media/1362321/dl?inline.  
3 US Department of Justice, Temporary Amendment to the Criminal Division Corporate Enforcement and Voluntary Self-Disclosure Policy (August 2024), https://www.justice.gov/criminal/media/1362316/dl?inline
4 US Department of Justice, Criminal Division Corporate Enforcement and Voluntary Self-Disclosure Policy (March 2024), https://www.justice.gov/criminal/criminal-fraud/file/1562831/dl
5 US Department of Justice, Corporate Whistleblower Awards Pilot Program Intake Form (August 1, 2024), https://www.justice.gov/criminal/media/1362356/dl?inline.  
6 US Department of Justice, Criminal Division’s Pilot Program on Voluntary Self-Disclosures for Individuals (April 15, 2024), https://www.justice.gov/criminal/media/1347991/dl?inline.  
7 US Department of Justice, Criminal Division Corporate Enforcement and Voluntary Self-Disclosure Policy (March 2024), https://www.justice.gov/criminal/criminal-fraud/file/1562831/dl.  
8 15 USC. 78u-6(h)(1); 17 CFR § 240.21F-17. Our March 2023 and January 2024 client alerts discussed the SEC’s whistleblower protection rule and the SEC’s enforcement thereof in the context of corporate employment and settlement agreements. See How to Avoid Risk of SEC Whistleblower Rule Violations in Connection with Employee-related Documents, White & Case LLP (March 7, 2023), https://www.whitecase.com/insight-alert/how-avoid-risk-sec-whistleblower-rule-violations-connection-employee-related; How to Avoid Risk of SEC Whistleblower Rule Violations in Connection with Settlement Agreement Confidentiality Provisions, White & Case LLP (January 24, 2024), https://www.whitecase.com/insight-alert/how-avoid-risk-sec-whistleblower-rule-violations-connection-settlement-agreement.

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