According to whistleblower advocates, the recent collapse of Silicon Valley Bank (SVB) is reminiscent of the collapse of Enron in 2002. Given the role Enron whistleblower Sherron Watkins played in exposing Enron’s accounting malpractice, advocates are pointing to the SVB collapse as a potent reminder of the importance of corporate whistleblowers.
“In light of the parallels between the Silicon Valley Bank collapse of 2023 and the fall of Enron in 2002, it’s important to be informed about the downfall of Enron and the employee, Sherron Watkins, who helped put an end to the corruption taking place within the massive corporation,” said Siri Nelson, Executive Director of the National Whistleblower Center (NWC).
“With the news of the Silicon Valley Bank collapse that occurred this year, it’s important to reflect on the importance of shining light on the corrupt practices of big banks and corporations, and taking strides to hold them accountable for their wrongdoing,” Nelson continued.
“Watkins’ actions helped obtain a level of public accountability and justice that may not have occurred without her inside knowledge. While no whistleblowers have publicly come forward regarding this scandal, it’s important to recognize the role whistleblowers play in upholding accountability at large.”
Watkins, WNN’s Senior Fellow for Ethics and Policy, was Enron’s Vice President when she wrote a now-infamous memo in the summer of 2001 to then-CEO Kenneth Lay warning him about improper accounting methods. Following the collapse of the company, Watkins was called to testify before both the U.S. House of Representatives and Senate about the accounting irregularities that she had found in the financial statements.
Watkins’ whistleblowing had far-reaching policy implications. It highlighted the glaring lack of protection for Wall Street whistleblowers and became one of the driving forces of the Sarbanes-Oxley (SOX) reforms. SOX ultimately laid the groundwork for the Dodd-Frank Act years later, which established the highly successful SEC Whistleblower Program.
In October, Watkins penned an op-ed published in The Hill highlighting the importance of the SEC Whistleblower Program amidst fears of an economic recession. While the piece predates the collapse of SVB, its arguments ring even more true in light of the economic worries surrounding the collapse.
“History proves that fraud increases as the country experiences a downturn in the economy,” Watkins writes. “Can we actually afford, literally, to do less to prevent fraud? The SEC’s whistleblower program is the agency’s most effective tool at rooting out fraud, but attempts to weaken the law will undermine future justice from being served to those who attempt to defraud.”
Earlier in March, Wakins joined alongside a group of other whistleblowers to launch a campaign calling for the permanent establishment of National Whistleblower Day. The whistleblowers are urging President Biden to sign an Executive Order permanently designating July 30 as National Whistleblower Day and requiring all federal agencies to recognize the day.