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.
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”).
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 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
The Securities and Exchange Commission recently weighed in on a whistleblower case pending in the Second Circuit, urging the court in Liu v. Siemens, A.G. to adopt the SEC’s interpretation of the Dodd-Frank Act’s anti-retaliation provision. If the Second Circuit agrees, its ruling would create a circuit split over whether Dodd-Frank protects from retaliation internal whistleblowers who do not make a report to the SEC, likely teeing up the issue for resolution by the Supreme Court. Read More
The SEC released its Fiscal Year 2013 Annual Report (the “Report”) to Congress on the Dodd-Frank Whistleblower Program on November 15, 2013. The Report analyzes the tips received over the last twelve months by the SEC’s Office of the Whistleblower (“OWB”) and provides additional information about the whistleblower award evaluation process. Read More
Two new Dodd-Frank decisions over the last week contain mixed results for employers. Read More
Two victories for employers last week in Dodd-Frank and SOX whistleblower cases may provide a basis for at least a sliver of optimism among employers and whistleblower defense lawyers hammered by a recent series of employee-favorable decisions under the two main federal statutes covering whistleblowing activity. Read More
Today the SEC announced that it is issuing a whistleblower award of over $14 million to a whistleblower who provided information that resulted in the recovery of investor funds. The significant whistleblower award comes after many critics have questioned the success of the SEC’s whistleblower award program which, to date, has only issued two much smaller awards since the program’s inception in 2011. The first award payment was issued in August 2012 for approximately $50,000. The second award, paid to three whistleblowers for information that stopped a sham hedge fund, has paid out approximately $25,000 with an expected total payout of $125,000. Read More
On July 17, 2013, the Fifth Circuit issued the first circuit court decision interpreting Dodd-Frank’s anti-retaliation provision. In Asadi v. G.E. Energy (USA), L.L.C., the Fifth Circuit held that, to be protected under Dodd-Frank’s anti-retaliation provision, an individual must be a “whistleblower,” which is defined by the statute as an individual who has made a report to the SEC. Notably, this holding directly conflicts with the SEC’s regulations interpreting the Act, as well as five district court decisions that had all held that employees who make internal reports to company management are protected under Dodd-Frank even if they did not make reports to the SEC. Rejecting these analyses, the Fifth Circuit based its decision on the plain wording of the statute, which it found to be unambiguous in protecting only “whistleblowers” as defined by the Act. Read More