Whistleblowers: Courage, Consequences, and the Choice to Speak Out

One way that corporate wrongdoing comes to light occurs when insiders in the firm call out conduct they believe is unethical, harmful, and potentially illegal. These ‘whistleblowers’ play a critical role in helping identify problems that would likely remain hidden within powerful institutions.

A whistleblower’s decision to speak up is rarely easy. In many instances, those who come forward face significant professional and personal risks, even when they are successful in curtailing ongoing harms and making their employer accountable.

On February 23, the Corporations and Society Initiative (CASI) hosted a conversation at Stanford Graduate School of Business titled Power and Accountability: The Costs and Benefits of Speaking Up. Eric Ben-Artzi, the former Deutsche Bank risk officer who blew the whistle on accounting practices at the bank, and Ellen Pao, former Reddit CEO and venture capitalist known for challenging gender bias in Silicon Valley, shared the real-world costs, risks, and impact of speaking up, and what accountability looks like in practice.

CASI Faculty Director Anat Admati moderated the discussion and began by noting that, at first glance, the two stories appear very different. One involved gender discrimination and workplace culture in the technology industry while the other centered on accounting practices inside a major financial institution. Yet both cases have striking similarities and give us valuable lessons about power, incentives, and accountability.

Admati asked each guest to reflect on the moment that concerning issues first surfaced for them and how they diagnosed the problem.

Ben-Artzi said his concerns at Deutsche Bank began in 2010 with what initially appeared to be a highly technical valuation issue. As a risk officer working on complex credit derivatives, he concluded that the bank was overvaluing part of a large derivatives portfolio, which masked potential losses in the billions.

“This was immediately after the financial crisis,” he said, “so I was very acutely aware of the particular credit derivatives that were involved.”  

He first raised the matter internally and eventually went to regulators in 2011 with two other employees, helping set off a multi-year investigation by the US Securities and Exchange Commission. In 2015, Deutsche Bank agreed to pay the SEC a $55 million SEC penalty, without admitting or denying wrongdoing.

Ben-Artzi made headlines again in 2016 when he rejected his share of the SEC whistleblower award, roughly $8.25 million, in a protest against the agency’s decision not to pursue senior executives.

Over time, he said, the larger problem he encountered was not just the financial misconduct itself, but what he viewed as weaknesses and conflicts of interest within the legal and regulatory systems meant to address it.

“That's become, for me, the issue that I think needs to change.”

The conversation turned to Pao, who recounted her time as a junior partner at the Silicon Valley venture capital firm Kleiner Perkins from June 2005 to October 2012.  Her concerns about discrimination emerged gradually through a pattern of contradictory and vague performance feedback and workplace dynamics that grew increasingly hard to explain as separate misunderstandings.

“If we have a conference, and it's two rows of tables, but all the women are in the back row and all the men are in the front row, you kind of wonder what's going on there,” she said. “Then there's a ski trip, and only men were invited and it's with CEOs and other folks that are important to build relationships with.”  The reason women were excluded, she was told was because they “killed the buzz.” 

The clearest signal came when a major venture fund was launched and “almost all of the men were promoted into the fund as partners, but none of the women.”  Pao realized then that the issue was not about her performance but about systemic barriers facing women across the venture capital industry.

In 2012, she filed a high-profile gender discrimination lawsuit against the firm, bringing national attention to the lack of women in senior venture capital roles along with the "micro-indignities" women faced in the industry.  In 2015, a jury rejected all of Pao's claims of gender discrimination and retaliation, concluding her performance led to her dismissal. Like Ben-Artzi, Pao was critical of the legal system for fostering an unfair playing field.

“It's very stacked in favor of the institutions that are repeat players and that have all the funds, and the plaintiff firms are struggling, and they don't have the resources,” she said.

Reflecting on the decade since their closely watched and highly publicized cases concluded, Admati asked both speakers how their thinking about their actions has evolved.

Pao said she has come to believe that change often begins with people simply talking about their experiences. Personal stories, especially when shared among colleagues and friends, can make systemic problems visible in ways statistics or formal complaints often cannot. Those conversations, she said, help others recognize patterns of bias or exclusion that might otherwise remain unseen.

“These small touch points can make a difference. People won't necessarily have the same opportunities and privilege to actually sue and litigate. It's a hard road, as you know, but I think that people talking about it causes a lot of change.”

Pao has also tried to translate those insights into practical guidance through Project Include, the nonprofit she co-founded. The organization provides resources for startups seeking to build more inclusive workplaces. By encouraging transparency and offering practical frameworks, she hopes organizations can address problems earlier and avoid repeating the kinds of systemic failures she experienced.

For Ben-Artzi a different focus emerged over time. His current work centers on encouraging people to rethink how agreements and contracts are structured so that when conflicts arise, they are resolved in a fair way and not through systems that advantage those having greater resources.

“When we resolve disputes, we end up going to the legal system where the incentive structure is one that is misaligned with the interests of the partnership and the law,” he said.

He advocated for starting with a pledge to resolve differences fairly and he suggested concrete actions such as strengthening a founder’s agreement for handling disputes, and incorporating collaborative law, a non-adversarial process for resolving disagreements when disputes arise.

Pao then spoke directly to the students pursuing a business education.

“You're in business school, you're thinking about your short-term future, but when you get towards the back end of your career, you start thinking, what value have I added to the world?”

She went on to share her experience as interim CEO of Reddit when in 2015, she announced a ban on so-called revenge porn, the distribution of explicit images and videos of a former sexual partner without their consent.

“It wasn't super popular, but we got rid of unauthorized nude photos, and that changed every single company and now it's not allowed on almost all the major platforms.”

Pao was subjected to intense abuse online and ultimately, resigned by “mutual agreement” from the company. Despite the controversy, Pao says she has no regrets.

Pao said she believes that personal acts of courage can have meaningful ripple effects. Hearing and sharing stories helps others recognize injustice and confront experiences they may have kept silent about, even if the broader system is slow to change.

“I did the right thing in my career. Maybe it's not the most popular thing, and maybe it's not the one that generated the most income for me personally. But I'm telling you, a lot of those people who are billionaires and very wealthy, they're not happy people. They don't sleep well. They’re always trying to get more money or more power, and that's a very hard way to live.”

Ben-Artzi said the deeper problem lies in how the legal system itself is structured. In his view, the incentives within that system often reward the offenders and enablers and in doing so fail to discourage misconduct.

“The repeat players are usually either the bad actors or the powerful law firms, both of which benefit from breaking the law,” he said. “It becomes a situation where it really pays to break the law. If you don't, you're not going to get ahead, you're not going to move up.”

“The only way to change that is if there's demand to change the incentive system within the legal system. There's hardly any awareness of that, and it's surprising to me.”

Responding to a question about how media fragmentation and political polarization have affected whistleblowing, Ben-Artzi noted that polarization is complicating matters, as the public increasingly interprets whistleblowing through partisan lenses.

Pao added that social media has increased the cost of whistleblowing by amplifying the harassment that can be directed at people who speak out.

“I think once you speak up, maybe you shut up because your family is at risk, your safety is at risk, and it becomes much harder,” she warned.  

Pao also noted that harassment now affects people across the political spectrum and expressed hope that the growing scale of the problem will eventually lead to stronger efforts to address it.