Financial Incentives for Whistleblowers in European Capital Markets Law? Legal Policy Considerations on the Reform of the Market Abuse Regime

21 Pages Posted: 6 Aug 2012

See all articles by Holger Fleischer

Holger Fleischer

Max Planck Institute for Comparative and International Private Law

Klaus Ulrich Schmolke

University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg - Law School

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Date Written: August 5, 2012

Abstract

The European Commission has recently released a Proposal for a Regulation on market abuse, to increase investor confidence and market integrity in European capital markets law. One of its most innovative elements involves allowing Member States to provide financial incentives to whistleblowers who report cases of market abuse. In this, the Commission has apparently taken inspiration from the US legislation which with the Dodd Frank Act of 2010, significantly expanded its whistleblower reward program. This article examines both the US and the European regulations, and evaluates the advantages and disadvantages of offering financial incentives to encourage informants to blow the whistle. Finally, it looks at the potential structure of a reward program, examining the balance required between external rewards and internal company compliance processes.

Suggested Citation

Fleischer, Holger and Schmolke, Klaus Ulrich, Financial Incentives for Whistleblowers in European Capital Markets Law? Legal Policy Considerations on the Reform of the Market Abuse Regime (August 5, 2012). ECGI - Law Working Paper No. 189/2012. Available at SSRN: https://ssrn.com/abstract=2124678 or http://dx.doi.org/10.2139/ssrn.2124678

Holger Fleischer (Contact Author)

Max Planck Institute for Comparative and International Private Law ( email )

Mittelweg 187
Hamburg, 20148
Germany

Klaus Ulrich Schmolke

University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg - Law School ( email )

91054, Erlangen
Germany

HOME PAGE: http://www.wr2.jura.uni-erlangen.de/

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