Companies should review their directors and officers liability insurance policies for entity investigation coverage following the Aug. 1 launch of U.S. Department of Justice’s whistleblower rewards program, experts say.
The substantial financial incentives offered to whistleblowers could lead to more investigations, but D&O policies may not cover or offer only limited coverage for related expenses, they say.
The DOJ program offers financial incentives to whistleblowers who provide “original, non-public, and truthful information,” leading to a successful forfeiture exceeding $1 million. Whistleblowers could also be eligible for up to 30% of the first $100 million in net proceeds forfeited and 5% of the next $100 million to $500 million in net proceeds forfeited, the agency said.
The DOJ designed the program to complement similar rewards plans launched by other agencies, such as the U.S. Securities and Exchange Commission, which established its whistleblower rewards program in 2010 with the passage of the Dodd-Frank Act.
The SEC’s program has successfully obtained tips from whistleblowers, sanctioned companies and disgorged ill-gotten gains. On Aug. 23, the SEC announced awards of more than $99 million to whistleblowers and said that, as of the end of fiscal year 2023, it had awarded nearly $2 billion to roughly 400 whistleblowers.
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