Should FIRREA Whistleblower Bounties Be Higher?
Law360Andrew W. Schilling
On Sept. 17, U.S. Attorney General Eric Holder raised the prospect of amending FIRREA — the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 — to increase its whistleblower awards with the goal of further incentivizing cooperation in financial fraud cases. While FIRREA has become the U.S. Justice Department’s “go-to” statute for pursuing financial fraud cases, its whistleblower awards are relatively stingy by today’s standards, and they are capped by statute at $1.6 million. In contrast, the department’s other key civil fraud statute — the False Claims Act — authorizes whistleblower awards up to 30 percent of the government’s recovery, without limit.
The attorney general’s proposal, which would bring FIRREA awards in line with FCA awards, comes at a time of staggeringly high FIRREA penalties. Indeed, in the last year, the government has recovered or been awarded FIRREA penalties exceeding $1 billion on three occasions, including a recent penalty of $5 billion. As the debate over the attorney general’s proposal begins, these staggering penalties raise an important question: In a world of multibillion dollar FIRREA penalties, are whistleblower bounties of hundreds of millions of dollars — or even billions of dollars — really necessary to encourage corporate insiders to blow the whistle on fraud?
Originally published by Law360; reprinted with permission.