What Should We Expect from the Dodd-Frank Bounty Program?
19 Pages Posted: 23 Jul 2012
Date Written: July 23, 2012
Abstract
Among other changes, the Dodd-Frank bounty program substantially increases the size of the rewards. The supporters argue that the program should encourage more players to step in, whereas the critics claim that it would only increase less reliable whistleblowers. This note describes the economic reasoning behind the dispute, attempting to build a reasonable expectation in light of the available empirical data. Although most of the evidence from previous bounty programs sides with the supporter’s theory, it has to be considered that the quantity and quality of whistleblower reporting are not the only relevant factors. Whistleblowers play a key role diversifying the sources of information that feed the system of enforcement and correcting the monitoring bias that public agencies might develop over time.
Keywords: Securities Regulation, Dodd-Frank Act, Whistle-blowing & Private Enforcement
JEL Classification: K22, K49
Suggested Citation: Suggested Citation