Whither Whistleblowing? Bounty Regimes, Regulatory Context, and the Challenge of Optimal Design
David Freeman Engstrom
Stanford Law School
October 17, 2013
15 Theoretical Inquiries in Law 605 (2014)
Stanford Public Law Working Paper No. 2341808
Whistleblower bounty schemes that pay individuals a cash “bounty” for surfacing information about illegal conduct have rapidly gained public and scholarly attention, fueling calls to install a bounty approach across numerous regulatory areas, from workplace safety, environmental protection, and civil rights, to political corruption, immigration, and antitrust. Yet despite the enthusiasm, bounty regimes have remained confined to the fraud context (procurement, securities, tax). This Essay, written as part of a symposium focused on “new approaches for a safer and healthier society,” uses this fact as a jumping off point and, looking across the regulatory state, asks some basic questions about bounty regimes that have thus far eluded sustained scholarly attention: What features of a given regulatory area make it more or less conducive to a bounty approach? Given this, how might existing bounty regimes be revised? And if bounty regimes were to break out of the fraud area, where might they most profitably spread? It then aims to answer these questions by constructing a simple framework that shows how two features of the regulatory environment — the “directness” of the harm to be regulated and the determinacy of the legal mandate to be implemented — structure the choice among competing bounty approaches. These aspects of regulatory context, I argue, map onto the two most vexing challenges facing regulatory architects weighing a bounty mechanism or choosing among competing designs: optimizing the quantity and quality of information revelation and maintaining public control over the elaboration of legal mandates. The framework brings into relief some of the fault-lines in growing scholarly debate about the optimal use and design of bounty schemes, including the choice between a simple cash-for-information scheme and a more elaborate qui tam scheme in which whistleblowers are vested with independent enforcement authority via a private right of action. It also yields a rough regulatory roadmap showing where existing bounty schemes might be revised and also the areas to which a bounty approach might be usefully exported.
Number of Pages in PDF File: 30
Keywords: bounty regimes, qui tam, Dodd-Frank, private enforcement, whistleblowing, whistleblowers, False Claims ActAccepted Paper Series
Date posted: October 21, 2013 ; Last revised: June 20, 2014
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