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Bigger bonuses for whistle-blowers: Are they ethical?

Under a new law, whistle-blowers can earn up to 30 percent of the funds the government recovers in fraud. For Wall Street whistle-blowers, that can mean big payouts.

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Enhanced bonuses for whistle-blowers help ease their concerns about having to leave their jobs once they turn their colleagues in, say supporters of the proposed federal rules.

Phil Marden/The Christian Science Monitor

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Whistle-blowing is about to get more profitable.

Under proposed federal rules, now under review, whistle-blowers could collect as much as 30 percent of what the government recovers from violators. Payouts could be eye-popping: a $1 billion fraud, not unthinkable on Wall Street, could net $300 million for one whistle-blower.

Will fatter bounties for turning in one's co-workers and bosses improve the ethics of corporate America – or undercut them? The answer depends, in part, on whom you ask; in part, on how the new regulations are written; and, in part, on how one balances pragmatism and ethical ideals.

Substantial bounties are necessary to uncover fraud, according to Stephen Kohn, executive director of the National Whistleblowers Center in Washington and author of "The Whistleblower's Handbook" (2011). It's not that whistleblowers are motivated by money, Mr. Kohn says. Rather, they need to know compensation is waiting because they'll probably never work again in their field.

"It moves somebody from a concern to actually taking the risk," Kohn says.

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