Whistleblower Protection: SEC Rules, Sarbanes-Oxley Act, Serious Fraud Office, and More…

“The SEC recently released its annual report on the new whistleblower bounty program as required by the Dodd-Frank Act… The report does not contain, however, any meaningful information about the types of individuals who have provided information to the SEC, whether those individuals also use available internal reporting systems, whether the information has been actionable for the SEC or whether the SEC has referred complaints to corporations to inform them of the potential misconduct…” (From SEC Issues Annual Report on New Whistleblower Program by White & Case LLP) 

The Securities & Exchange Commission may not be saying much about its new whistleblower bounty program, but securities lawyers and law firms on JD Supra certainly are. For your reference, here’s a roundup of recent whistleblower-related updates:

On the new SEC whistleblower protection rules… 

Blowing the Whistle: New SEC Rules Set the Stage for Increased Reporting of Potential Securities Law Violations (Sutherland Asbill & Brennan LLP):

“By way of background, the first thing to note about Dodd-Frank’s whistleblower provisions and the SEC’s rules implementing those provisions is their goal: the legislation and the SEC’s rules are designed to motivate employees of companies that must comply with the securities laws to tip the SEC regarding possible securities laws violations by their employers. The incentives take two forms: monetary awards and job protection.” Read more»

Securities & Employment Law Alert: Whistleblower Protections Expanded (Winthrop & Weinstine, P.A.): 

“SEC whistleblower rules added under the Dodd-Frank Act now in effect will have a significant impact on private and public companies. Companies should become familiar with the new rules and train their management and employees to prevent any unintentional violations of the rules.” Read more»

The BNY Whistleblower – The Dodd-Frank Clock is Running, is Your Company Ready? (Thomas Fox):

“The time period that an internal whistleblower must wait before he or she can bring information to the Securities and Exchange Commission, under the Dodd-Frank Whistleblower provision, within 120 days after the information has been internally reported to the company. Is your company ready for the speed in which an internal investigation must now be completed?” Read more»

Game Changer: New SEC Whistleblower Rules Take Effect (Winthrop & Weinstine, P.A.):

“Employee at a small private company who reports to the SEC that individuals are engaging in wire fraud and is fired by her employer could bring a direct anti‐retaliation action in federal district court.” Read more»

On the Sarbanes-Oxley Act…

SOX Whistleblowers May Now Claim a “Very Broad Spectrum of Adverse Action” (Venable LLP): 

“The whistle blower provision of the Sarbanes–Oxley Act (‘SOX’) protects an employee who provides information regarding fraud and violations of rules or regulations of the SEC. Toward that end, Section 806 states that no company ‘may discharge, demote, threaten, harass, or in any other manner discriminate against an employee in the terms and conditions of employment’ because of the protected activity. In the past few years, whistle blowers claiming they have been subjected to adverse employment actions for reporting violations under SOX have had to overcome a relatively high hurdle.” Read more»

Sarbanes-Oxley Whistleblower Protections Apply to Non-Tangible Employment Action (Duane Morris LLP):

“The U.S. Department of Labor Administrative Review Board (ARB) has concluded in Menendez v. Halliburton, Inc., that an employer’s release of a whistleblower’s identity to other employees violated the whistleblower’s right to confidentiality, which by itself constituted an adverse action against the whistleblower and thus violated the anti-retaliation provisions of the Sarbanes-Oxley Act of 2002. The ARB determined that whistleblowers are protected against unfavorable employment action that is ‘more than trivial’ and ‘non-tangible,’ even when the whistleblower’s reasonable belief was ultimately mistaken.” Read more»

On the Serious Fraud Office initiative…

SFO launches new initiative to encourage whistle-blowing (Bryan Cave):

“On November 1, 2011, the Serious Fraud Office (‘SFO’) launched a new service, ‘SFO Confidential’, for company insiders to report in confidence suspected serious or complex fraud or corruption. The service launched a telephone hot-line providing access to a dedicated team of SFO operatives, as well as an on-line reporting system. SFO Confidential is aimed at individuals who have gained knowledge of suspected fraud or corruption through their professional activities, and is intended to supplement the existing national fraud reporting service for victims or those directly affected by fraud.” Read more»

On related matters…

Ober|Kaler Nonprofits Alert: Can an Effective Whistleblower Policy Prevent Misconduct? (Ober|Kaler):

“It is not enough to have whistleblower policies on paper – executives of academic institutions, nonprofits and for profit organizations bear equal responsibility for fostering a culture of compliance. This means that a process for actually ‘following up’ on investigative leads is an important piece of the whistleblower policy. Truly effective whistleblower and investigative policies can reduce the risk of harm to individual victims and prevent monetary damages and reputational harm. Why should this be personally important to managers of nonprofits and other organizations?” Read more»

Whistleblower Risks – It May Be Time to Reexamine Assumptions about their Management and Insurability (International Lawyers Network):

“Virtually any risk management program written prior to the 2008 elections may need to be recalibrated to take account of new definitions introduced by whistleblower features of legislation nominally concerning healthcare and financial services, but in reality reaching much more broadly beyond the bounds of the industries ostensibly targeted.” Read more»

Launching a Whistleblower Hotline Across Europe (White & Case LLP):

“Domestically within the US, workplace whistleblower hotlines are a largely uncontroversial ‘best practice’ to which few ever object. But tensions rise when a multinational extends report channels abroad. In Europe in particular, whistleblower hotlines can spark blowback from staff, employee representatives and government enforcers, and can trigger confounding legal issues without US counterpart. To a socially-responsible American, the hurdles impeding European whistleblower hotlines have gotten higher than they should have any right to get.” Read more»


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