Advising A Whistleblower After Dodd-Frank: What Every Employer Needs To Know
Tammy Marzigliano, Law Journal Newsletters, Employment Law Strategist, ALM, Volume 19, Number 10, April 2012. This article examines the retaliation protections provided by Dodd-Frank and how employment lawyers might deal with their impact.
On July 21, 2010, Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act, the most significant financial reform effort since the Great Depression. 17 CFR § 240.21F-1, et seq. Part of that legislation directed the Securities and Exchange Commission (SEC) to establish a whistleblower program that pays monetary rewards to eligible whistleblowers, and prohibits workplace retaliation by employers against whistleblowers. This article examines the retaliation protections provided by Dodd-Frank and how employment lawyers might deal with their impact.
Advocacy & Counsel For The SEC Whistleblower: A Primer For Employment Lawyers
Tammy Marzigliano and Jordan A. Thomas. Bloomberg BNA Daily Labor Report. Reproduced with permission from Daily Labor Report, 196 DLR I-1 , 10/11/2011. Copyright 2011 by The Bureau of National Affairs, Inc. (800-372-1033) http://www.bna.com
In the wake of multiple far-reaching corporate scandals and pervasive misconduct that have eroded public faith in the markets, Congress enacted the whistleblower provisions in the Dodd-Frank Wall Street Reform and Consumer Protection Act. The provisions require the SEC to pay financial awards to whistleblowers who voluntarily provide original information leading to a judicial or administrative action in which the SEC obtains monetary sanctions over $1 million, subject to certain limitations. Whistleblowers who provide such information are eligible for an award of 10 percent to 30 percent of the monetary sanctions.
Since the enactment of the whistleblower provisions, there has been undue emphasis on the financial incentives available to qualified SEC whistleblowers. However, the new robust anti-retaliation provisions contained in the guidelines are equally important. Employers are prohibited from retaliating against individuals who provide the SEC with information about possible federal securities law violations, and victims of retaliation are granted an independent cause of action with significant potential remedies. Providing additional protection, whistleblowers are also permitted to report securities violations anonymously if they are represented by counsel.
These protections and incentives will result in a significant increase in whistleblower activity and, by extension, will have a huge impact on the workplace environment. This article examines the protections provided by the statute and offers practical guidance for the plaintiff’s employment lawyer in identifying and counseling potential SEC whistleblowers.
This article examines the protections provided by the statute and offers practical guidance for the plaintiff’s employment lawyer in identifying and counseling potential SEC whistleblowers.
The Dodd-Frank Act's Whistleblower Provisions: The Act's Best Hope For Exposing Financial Wrongdoing
In this BNA Insights article, Outten & Golden attorneys Tammy Marzigliano and Cara E. Greene take a close look at these provisions and the effects of preceding laws, such as the Sarbanes-Oxley Act, to examine what their future impact might be. Bloomberg BNA, Workplace Law Report, 10/22/2010.
On Sept. 15, 2008, Lehman Brothers collapsed, sending shock waves through the financial services industry and portending the industry's broader meltdown. Less than two weeks later, Washington Mutual was seized by the federal government and placed into receivership. Over the next year, more than 100 banks folded, Americans saw $13 trillion in wealth evaporate, and massive securities fraud, like that committed by Bernie Madoff, shook investor confidence to the core. The housing market collapsed, the number of people out of work hit 15.6 million, and the federal deficit ballooned. America was in the midst of the Great Recession.
In response, on July 21, 2010, the federal government enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “act” or “Dodd-Frank Act”), which overhauls and strengthens federal oversight of the financial system. While it is impossible to know whether the financial meltdown could have been avoided had the act's provisions been adopted in 2007 instead of 2010, the question on everyone's mind is whether the Dodd-Frank Act will keep it from happening again. Only time will tell if it will have the desired and intended impact, but the act's whistleblower provisions attempt to ensure that in the future financial fraud and irregularities are exposed long before they corrupt the entire system.
Arbitrability Of Sarbanes-Oxley Whistleblower Claims
This article explores the arguments presented by member firms and registered employees, and outlines what arbitration panels have decided. Laurence S. Moy. Pearl Zachlewski, Linda Neilan, and Katherine Blostein. The Neutral Corner, Newsletter of FINRA Neutrals, Volume 1, 2008.
Since the passage of the Sarbanes-Oxley Act of 2002 (SOX), arbitrators handling employment claims may be faced with a throny question concerning SOX whistleblower claims: Should a SOX claim be litigated in court or arbitrated? Ultimately, the question comes to whether SOX whistleblower claims constitute "employment discrimination" claims, and are thus exempt from arbitration under Rule 13201 of the Code of Arbitration Procedure for Industry Disputes (Code). This article explores the arguments presented by member firms and registered employees and outlines what arbitration panels have decided.
Whistleblower Claims Under The Sarbanes-Oxley Act Of 2002
Laurence S. Moy, Linda A. Neilan, and Hollis Pfitsch (Summer Associate), Practising Law Institute, October 7-8, 2004, and December 9-10, 2004.
In the wake of recent accounting and corporate scandals, Congress passed the Sarbanes-Oxley Act of 2002 (hereinafter, “Sarbanes-Oxley,” “SOX,” or the “Act”), Public L. No. 107-204, Sec. 806, codified at 18 U.S.C. § 1514A.1 In addition to providing greater oversight of the accounting industry and protecting investors, the Act prohibits employers from retaliating against whistleblowers. (“Whistleblower” might be considered a misnomer since the Act’s scope is not limited to employees who “blow the whistle” by refusing to engage in illegal or wrongful acts or by reporting such activities to the employer or the appropriate authorities.) The Act provides extensive coverage to employees who report improper conduct as well as employees who participate in proceedings relating to same. Companies that fall under the purview of Sarbanes-Oxley are prohibited from discharging, demoting, suspending, threatening, harassing, or discriminating against any employee who engages in protected activity. 18 U.S.C. § 1514A(a).
Prior to Sarbanes-Oxley’s enactment, federal and state whistleblower statutes provided limited protection for a narrow class of employees. The False Claims Act covers employees only if they report fraud on the federal government. 31 U.S.C. § 3730(h).2 In New York, a state statute had provided pre-Sarbanes-Oxley whistleblowers with extremely limited coverage. That statute, New York Labor Law § 740, only protects an employee who “discloses, or threatens to disclose to a supervisor or to a public body an activity, policy or practice of the employer that is in violation of law, rule or regulation which violation creates and presents a substantial and specific danger to the public health or safety.” N. Y. Lab. Law § 740(2). Thus, Sarbanes-Oxley has vastly changed the horizon of protection for whistleblowers in the private sector.
This paper addresses the whistleblowing provisions of the Act and its accompanying regulations, provides guidance to lawyers advising companies responding to potential whistleblower complaints of improper conduct, and reviews the duties of lawyers to report wrongful conduct as per the Securities and Exchange Commission’s (“SEC” or “Commission”) new regulations.
When Your Employer Thinks You Acted Disloyally: The Guarantees And Uncertainties Of Retaliation Law
Wayne N. Outten, Scott Moss and Piper Hoffman, April 1, 2003
Extensive statutory and case law prohibits various forms of employer retaliation against employees who engage in legally proper, necessary, or desirable activities. The law on retaliation is not unified, however; as discussed in Part I, it is spread among many federal and state statutes typically organized by subject matter – e.g., retaliation against opposition to discrimination, retaliation against government employee whistleblowing, etc. Many basic principles of retaliation law are well-established, as the survey of federal law in Part I elaborates. Numerous issues in retaliation law remain unresolved, however, with different courts openly disagreeing on the limits of employee protections, as Part II discusses.
Retaliatory Counterclaims: Turning The Tables On The Overly Aggressive Defendent
Authored by employment attorneys Justin M. Swartz, Tarik F. Ajami, and Mark R. Humowiecki. This article sets forth the advantages and disadvantages of these different options and the basic legal principles that are common to retaliatory counterclaims no matter what course you choose.
Twenty days after filing your class action complaint, you receive defendant’s Answer. Curiously, not only does the company deny each and every allegation, it also asserts counterclaims alleging that it is entitled to the disgorgement of salary paid to the named plaintiff because of his “crude, improper, and disruptive conduct” while an employee. Not only is this counterclaim entirely baseless as a legal and factual matter, it is also a form of retaliation against the plaintiff that aims to intimidate him and other employees from enforcing their rights.
Recently, we have seen a spate of frivolous, retaliatory counterclaims asserted against our clients in both individual and class employment actions. Such counterclaims present an opportunity for the smart plaintiff’s attorney to take the offensive with respect to her adversary and to appear the more reasonable party before the court (while also showing how nefarious her adversary is). Your options for responding to such counterclaims are myriad. Factors such as the strength of the counterclaim, the nature of the underlying litigation, the actual chilling effect of the retaliation, and the dispositions of the adversary and the judge will dictate the most appropriate strategy.
You may simply amend the complaint to assert a retaliation claim or seek to convince the opposing counsel to withdraw the counterclaims. Alternatively, you may want to aggressively litigate the retaliation from the beginning by moving to dismiss the counterclaims or even seeking to enjoin further retaliation and to impose other measures to repair the chilling effect of the retaliation. This article sets forth the advantages and disadvantages of these different options and the basic legal principles that are common to retaliatory counterclaims no matter what course you choose.