Here’s a recent blog post from my partner Bill McGrath that appeared Wednesday on our sister blog – Federal Securities Law Blog. In his post, Bill discusses a recent decision from the First Circuit in which the court ruled that, while the whistleblower protections of the Sarbanes-Oxley Act apply to employees of public companies, they do
Congress’ recent passage and President Obama’s signing of the “Dodd-Frank Wall Street Reform and Consumer Protection Act” provides significant incentives for financial industry whistleblowers to assist the government root out fraudulent practices and other unlawful conduct in the industry. Supporters of the Dodd-Frank Act are praising its expansive whistleblower protections as a necessary good corporate-citizen tool to help the government ensure a financial crisis like 2008 never happens again.
Under the Dodd-Frank Act, whistleblowers in publicly traded companies are provided significant personal financial incentives to disclose to the SEC “original” information concerning securities laws violations occurring within their companies. “Original” information means the information must be derived from the whistleblower’s independent knowledge or analysis and cannot be known to the SEC from any other source. The available financial reward — or “bounty” — available to a qualifying whistleblower will range from 10% to 30% of any financial recovery in excess of $1,000,000 that the SEC obtains from the targeted corporation, including the amount of any penalties, disgorgement and interest.
The Dodd-Frank Act also protects the whistleblower from being retaliated against by the employer because the whistleblower provided information to the SEC. The Act gives the whistleblower a private right of action in federal court to try to establish the unlawful retaliation. Remedies for the successful whistleblower may include reinstatement, double back pay with interest, expert witness fees, and attorneys fees. Thus, Congress clearly intended for these remedies, coupled with a possible incentive bounty of at least $100,000, to encourage whistleblowers to come forward and assist the government attack corporate financial fraud.Continue Reading Whistleblowing Galore Under the Dodd-Frank Act
Publicly traded companies need to remain vigilant to avoid employment-related retaliation against employees who may complain about company violations of accounting controls and possible violations of SEC related rules or regulations. In a whistleblower case under SOX, OSHA recently ordered Tennessee Commerce Bank to reinstate its former chief financial officer and pay him more than $1 million in back wages, interest, attorneys fees and compensatory damages.
Apparently fostering the Obama administration’s push for stricter enforcement of Department of Labor and financial industry regulations, an Assistant Secretary of Labor for OSHA issued this statement about OSHA’s order: “This case clearly shows the Department’s commitment to ensuring individuals are provided the protections and relief forwarded by the laws and sends a strong message that retaliatory actions will not be tolerated.”Continue Reading OSHA Sends Strong Message Under SOX