On September 22, 2014, the SEC announced its largest whistleblower award to date under its Dodd-Frank whistleblower bounty program. It awarded $30-$35 million to an anonymous whistleblower who the Commission said provided original information about an ongoing fraud that would otherwise have been difficult to detect. That information led to the successful enforcement of an SEC action as well as unspecified related actions. The SEC stated that the whistleblower’s award would have been even higher if he/she had not unreasonably delayed in coming forward, though the agency did not apply the unreasonable delay consideration as severely as it otherwise would have because some of the delay occurred before the whistleblower program’s inception.
Renee B. Phillips
Renee Phillips, a senior associate in the New York office, is a member of the employment law group. Orrick’s Employment Law and Litigation group was recently named Labor & Employment Department of the Year in California by The Recorder, the premier source for legal news, in recognition of their significant wins on behalf of leading multinational companies on today’s most complex and challenging employment law matters.
Ms. Phillips’ practice includes a full range of employment litigation and counseling, with particular emphasis on discrimination, sexual harassment and Sarbanes-Oxley/Dodd-Frank whistleblower issues.
Ms. Phillips has successfully defended employers in federal and state court litigations as well as administrative proceedings and arbitrations involving claims of discrimination, harassment, wrongful termination, Sarbanes-Oxley whistleblowing, trade secret misappropriation and other employment-related claims. She regularly counsels employers on a variety of employment-related issues and assists clients in creating and implementing human resources policies, whistleblower policies, negotiating and drafting executive contracts and other employment agreements, and conducting internal investigations.
Ms. Phillips is the co-author of the first treatise to be published on the subject of Sarbanes-Oxley/Dodd-Frank whistleblower law.
OSHA’s Whistleblower Protection Advisory Committee (“WPAC”) met on September 3-4, 2014. David Michaels, Assistant Secretary of Labor, OSHA, addressed the Committee and discussed recent results and initiatives of OSHA’s whistleblower program. Some highlights:
A California appellate court recently held that employers are always required to reimburse employees for mandatory use of their personal cell phones, even if they do not incur any additional expense for doing so. The case is Cochran v. Schwan’s Home Services Inc., Court of Appeal of the State of California, Second Appellate District, Divisions Two, Case No. B247160 (August 12, 2014). A copy of the opinion can be found here.
Last week, in Liu v. Siemens, AG, the Second Circuit held that the Dodd-Frank Act’s whistleblower retaliation provision (15 U.S.C. 78u-6(h)(1)) does not apply extraterritorially, in the first Second Circuit decision to address the international scope of Dodd-Frank’s whistleblower protections against retaliation. Liu, a citizen and resident of Taiwan, was a compliance officer for Siemens China Ltd., a wholly owned subsidiary of Siemens AG. Siemens AG is a German corporation with shares listed on the New York Stock Exchange. Liu claimed Siemens wrongfully terminated his employment in retaliation for reporting that Siemens China Ltd. employees were making improper payments to Chinese officials in North Korea and China in connection with the sale of medical equipment in those countries, in violation of the Foreign Corrupt Practices Act (“FCPA”).
Last week, the Second Circuit upheld a district court’s dismissal of a plaintiff’s Sarbanes-Oxley (“SOX”) whistleblower claim – but not before rejecting the “definitively and specifically” standard on which the district court’s decision relied. Nielsen v. AECOM Tech. Corp., No. 13-235-cv (2d Cir. Aug. 8, 2014).
The U.S. Securities and Exchange Commission recently announced the latest whistleblower bounty awarded under the Dodd-Frank Act, which authorizes rewards for original information about violations of securities laws. Whistleblowers can receive 10 percent to 30 percent of the money collected in an SEC enforcement action where the monetary sanctions imposed exceed $1 million.
On the heels of the Hobby Lobby decision in late June, the Supreme Court has signaled that women’s health issues in the workplace will continue to be a central issue by granting a petition for certiorari in Young v. United Parcel Service on July 1, 2014. In Young, the Court will examine whether the Pregnancy Discrimination Act (“PDA”), which provides that pregnant women “shall be treated the same for all employment-related purposes…as other persons…similar in their ability or inability to work,” requires employers to provide work accommodations to pregnant women to the same extent they provide them to other disabled workers. The Court’s review of Young comes at a time when pregnancy discrimination laws are gaining more attention and more traction, and litigation in this area is increasing.
On June 16, 2014, the SEC issued its first-ever charge of whistleblower retaliation under section 922 of the Dodd-Frank Act, charging a hedge fund advisor and its owner with “engaging in prohibited principal transactions and then retaliating against the employee who reported the trading activity to the SEC.” Read More
On Monday, May 19, 2014, the U.S. Commodity Futures Trading Commission (“CFTC”) issued its first award to a whistleblower under its Dodd-Frank bounty program.
The Commission will pay $240,000 to an unidentified whistleblower who “voluntarily provided original information that caused the Commission to launch an investigation that led to an enforcement action” in which the judgment and sanctions exceeded $1 million. The heavily redacted award determination on the CFTC’s website does not reveal the name of the implicated company, the nature of the wrongdoing involved, the percentage of bounty the whistleblower received (which is required to be between 10 and 30 percent pursuant to the statute), or the factors considered in determining the percentage of the bounty.
Prior to this first grant of an award to a whistleblower under the CFTC’s Dodd-Frank bounty program, there were 25 denials of award claims. The reasons for the denials primarily fell into one or more of several categories:
- the individuals provided information before the passage of Dodd-Frank;
- they did not file a form TCR as required by the regulations;
- they did not provide information “voluntarily” but rather in response to a Commission request; and/or
- the information did not cause the Commission to open or expand an investigation or significantly contribute to a success of a Commission matter.
Time will tell whether this first award will have any effect on the number of whistleblowers who report to the CFTC or the quality of information the Commission receives.
The use of criminal background checks when hiring employees has become even more limited in San Francisco. On August 13, 2014, the recently passed Fair Chance Ordinance (Ordinance) becomes operative requiring employers doing business in San Francisco and employing 20 or more workers, regardless of location, to limit the use of an applicant’s criminal history. Read More