New whistleblower rules encourage a nation of paid informants

The new whistleblower program is the latest sign of a broader shift in American enforcement policy. Agencies are increasingly turning to whistleblower programs as enforcement tools, moving from a system focused primarily on protecting those who report wrongdoing to one that pays for information.  

This trend did not begin with this network. Since 1963, the False Claims Act has allowed qui tam whistleblowers to sue on behalf of the government and collect 15 percent to 30 percent of the recovery.

The 2010 Dodd-Frank Act also created large-scale whistleblower programs at the Securities and Exchange Commission and Commodity Futures Trading Commission. More recently, the Department of Justice developed its Corporate Whistleblower Awards Pilot Program and antitrust rewards program. 

Together, these programs reflect a clear pattern: When the government wants more information, it is increasingly willing to pay people to provide it. 

The case for this approach is that much of the misconduct these programs target is internal and difficult to detect. Regulators do not have unlimited resources, and companies do not always self-disclose. This perceived justification is important, but it also no longer fully captures what these programs have become.

The historic moral understanding of whistleblowing was rooted in the idea of public duty. One of the earliest known American whistleblower cases arose during the Revolutionary War. Congress ultimately protected the whistleblowers and, on July 30, 1778, declared that “it is the duty of all persons in the service of the United States, as well as all other inhabitants thereof” to report misconduct.

The underlying idea was straightforward: Exposing wrongdoing is a public obligation, and people who come forward in the public interest should........

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