Whistleblower Law Blog
Topic: Securities and Exchange Commission (SEC)
The U.S. Securities and Exchange Commission (SEC) announced its second whistleblower award in a month, saying it will give the maximum 30% share of penalties in an unidentified case to a tipster who helped in the enforcement action.
Coming after a huge $14 million award earlier in October, the more modest payout of more than $150,000 suggests that the SEC’s whistleblower office is systematically nailing all of its prescribed metrics: Successive announcements have emphasized payout speed (payment in August on an award made in June); payout size (the $14 million award); and, here, payout percentage.
A federal judge ruled that the Dodd-Frank Act protects whistleblowers from retaliation even if they’re punished by an employer before bringing their concerns to the Securities and Exchange Commission (SEC).
The ruling is the first explicit repudiation of July’s high-profile Asadi decision by the U.S. Court of Appeals for the Fifth Circuit, which held that Dodd-Frank starts protecting employees only after they report corporate misdeeds to the SEC.
The U.S. Securities and Exchange Commission (SEC) awarded an unnamed tipster more than $14 million, obliterating all doubt about the resolve of the agency’s whistleblower program.
The SEC didn’t identify the underlying enforcement action in either its press release or a related order, but the award’s enormous size indicates that the U.S. government may reap as much as $140 million in penalties as a result of the whistleblower’s information.
By holding the Dodd-Frank Act to a literal reading of its language — and rejecting any consideration of the statute’s goals — a federal appeals court has set up a battle over who may claim protection as a corporate “whistleblower” under the law.
“We start and end our analysis with the text of the relevant statute,” the U.S. Court of Appeals for the Fifth Circuit said in Asadi v. G.E. Energy (USA) L.L.C. — and indeed, the court parsed Dodd-Frank with the cold eye of a professional copy editor, concluding that the law protects employees against retaliation only if they have reported corporate wrongdoing to the Securities and Exchange Commission (SEC) via prescribed channels.
The U.S. Department of Labor’s Administrative Review Board (ARB) revisited a long-running case, once again ruling against Halliburton, the oilfield services giant, for retaliating against a whistleblower who reported accounting irregularities to the U.S. Securities and Exchange Commission (SEC).
The ARB awarded financial executive Anthony Menendez $30,000 in damages, plus costs and lawyers’ fees.
R. Scott Oswald, managing principal of The Employment Law Group, P.C., recently published an article in Law360 reviewing favorable developments in employment law for whistleblowers during 2012.
According to Oswald, these developments “further open the door to greater whistleblower revelations in the future, resulting in fewer laws being broken, savings for taxpayers, safer working conditions, increased awards to relators, other benefits and even lives being saved.”
Among the significant developments for whistleblowers in 2012 discussed were:
- The Department of Justice collecting nearly $5 billion in False Claims Act settlements and judgments
- The IRS and SEC Whistleblower Offices announced some of their first and largest awards
- The passage of the Whistleblower Protection Enhancement Act (WPEA) strengthened legal protections for federal employees who blow the whistle by disclosing government abuse, fraud and waste
- States continued to enact local False Claim Acts to come into compliance with the federal False Claims Act
- The Administrative Review Board (ARB) at the Department of Labor continued its whistleblower-favorable trend
- Federal courts interpreted the Dodd-Frank Act’s anti-retaliation provisions to include internal complaints, with the first Dodd-Frank claims surviving a motion to dismiss in federal court.
The article, “2012 Opens The Door For More Whistleblower Participation”, was published in the January 3, 2013 edition of Law360.
The Employment Law Group® law firm has an nationwide whistleblower protection practice representing employees who have been victims of retaliation, including a $819,000 False Claims Act whistleblower retaliation verdict on behalf of a client.
Oregon Law Journal Publishes Commentary by R. Scott Oswald on SEC Enforcement Priorities and Potential Future Actions against Dark Pool Trading
On December 20, 2012, whistleblower lawyer and managing principal of The Employment Law Group, P.C., R. Scott Oswald, published an article on the a recent U.S. Securities Exchange Commission (SEC) settlement that may encourage more enforcement actions against dark pool trading.
According to Mr. Oswald, “dark pools facilitate large trades off the main exchanges” and “because the trades are secret, dark pools allow institutional investors to make big trades without revealing their intentions.” The use of such alternative trading systems, led to the SEC’s enforcement action against and eventual settlement with Pipeline Trading, LLC for $1 million to resolve claims that Pipeline violated its disclosure duties and engaged in securities fraud.
Mr. Oswald also notes that this settlement sends a powerful commission that the SEC is “directly confronting the issues alternative trading systems pose” and that the “SEC’s willingness to prosecute claims with small damages gives employees and incentive to come forward” should they learn of misconduct by their employers.
The article, “Whistleblower Attorneys: Recent SEC Settlement with Pipeline Inc. may encourage Dark Pool Trading Suits” was originally published in the December 2012 edition of the Oregon Legal Journal and also appeared in Traders’ Magazine.
The Employment Law Group® law firm is a leader in the field of whistleblower protection law and has published a guide on the SEC’s new rules for the Dodd-Frank whistleblower program.
The Securities and Exchange Commission (SEC) this month released its “Annual Report on the Dodd-Frank Whistleblower Program,” which announced that in fiscal year 2012 the agency received a total of 3,001 tips from all fifty states, Washington, D.C., Puerto Rico and from forty-nine foreign countries. Under the new program, the first reward was issued on August 21 to a whistleblower who reported a multimillion-dollar fraud. The report also found that out of the 3,001 tips received, the SEC issued 143 enforcement judgments and orders. These enforcement judgments and orders were posted by the Office of the Whistleblower as “Notices of Covered Action” because their monetary sanctions exceeded $1 million. Under the Dodd-Frank Whistleblower Program, individuals are given 90 days from the time in which these notices are posted to apply for a whistleblower incentive award.
“In just its first year, the whistleblower program already has proven to be a valuable tool in helping us ferret out financial fraud,” said SEC Chairman Mary L. Schapiro. “When insiders provide us with high-quality road maps of fraudulent wrongdoing, it reduces the length of time we spend investigating and saves the agency substantial resources.”
By R. Scott Oswald
The Employment Law Group® law firm is a leader in the field of whistleblower law and has published a guide on the SEC’s new rules for the Dodd-Frank whistleblower program.
The Securities and Exchange Commission (SEC) announced last week that the first payout from the new SEC Whistleblower Program will be awarded to a whistleblower that helped the government stop a multi-million dollar fraud. The whistleblower will receive nearly $50,000, or thirty percent of the amount collected by the SEC.
While the SEC did not announce the name of the whistleblower or the company in question, the agency did announce that thanks to the documents and information provided by the whistleblower, the SEC was able to accelerate the investigation which led to a court ordering more than $1 million in sanctions. Thus far, approximately $150,000 has been collected, with nearly $50,000 set aside as a reward for the whistleblower.
SEC Chairman Mary L. Schapiro, who advocated the SEC Whistleblower Program, stated:
“The whistleblower program is already becoming a success… we’re seeing high-quality tips that are saving our investigators substantial time and resources.”
The Employment Law Group® law firm is a leader in the field of whistleblower protection law and has an extensive nationwide whistleblower practice representing employees who have exposed illegal activity by their employer.
Law360 Interviews The Employment Law Group® Managing Principal, R. Scott Oswald, on Potential Effects of Report Claiming that the SEC Inadvertently Disclosed a Whistleblower’s Identity
R. Scott Oswald, managing principal of The Employment Law Group® law firm, was recently interviewed by Law360 and provided commentary on a report that the U.S. Securities and Exchange Commission (SEC) may have inadvertently exposed the identity of a corporate whistleblower. Last week the Wall Street Journal reported that the SEC had unintentionally revealed the identity of a whistleblower during the course of the agency’s investigation of Pipeline Trading Systems LLC.
Some commentators have predicted that because of the SEC’s purported slipup, whistleblowers may be less likely to come forward, fearing that their anonymity may be compromised. However, in his interview on the subject with Law360, Oswald, who represents employees and whistleblowers, noted that the reason that many whistleblowers decide to file a complaint with the SEC is because the whistleblowers have already complained to their employers to no avail.
Specifically, according to Oswald, “once [whistleblowers] have made the decision that the company is not going to act responsibly, they’re going to go to the SEC.”
“If anything”, Oswald said “the SEC’s goof would persuade potential whistleblowers to file anonymous complaints through counsel, rather than going directly to the commission”.
The article, entitled “SEC Whistleblower Reveal Won’t Sink Program, Attys Say”, appeared in the April 25, 2012 edition of the online legal news and commentary service, Law360.
The Employment Law Group® law firm is a leader in the field of whistleblower law and has an extensive nationwide whistleblower practice representing employees who have exposed illegal activity by their employer.