Dodd-Frank Act

CFTC Whistleblower Program Ends the Year with Another Seven-Figure Bounty Award

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On December 19, 2019, the U.S. Commodity Futures Trading Commission (CFTC) announced that it will award more than $1 million to an individual whose tip helped expose a securities fraud scheme and eventually led to the CFTC filing charges. The individual first provided the information through the employer’s internal compliance program, which the employer submitted to another regulator, and the individual subsequently provided that information directly to the CFTC.  The award is significant because it recognizes that individuals are eligible to receive an award for: (1) being the original source of information the CFTC receives from another regulator; and (2) a tip that leads to evidence of a violation the CFTC ultimately charges, even if the reported conduct itself does not form the basis for those charges. READ MORE →

Court Rules Dodd-Frank Whistleblower Retaliation Claims Are Arbitrable

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We have previously written about how Dodd-Frank retaliation cases are a mixed bag for employers and about the Supreme Court’s expansion of Sarbanes-Oxley (“SOX”) Whistleblower protections.  A new decision from the Wisconsin District Court is another mixed win for employers who want to enforce arbitration agreements in Dodd-Frank and SOX retaliation cases.  In a case of first impression in the Seventh Circuit, Wussow v. Bruker Corporation., No. 16-cv-444-wmc, 2017 WL 2805016 (W.D. Wis. June 25, 2017), the district court held that while arbitration of SOX whistleblower retaliation claims cannot be compelled, a similar cause of action for whistleblower retaliation under Dodd-Frank can be. READ MORE →

SEC Bounty Hunters Take Heart: SEC Fines Company $265,000 For Using Severance Agreements That Provided a Waiver of Any Monetary Recovery For Filing a Tip

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shutterstock_150166427_200x150Today, the SEC announced that an Atlanta-based company, BlueLinx Holdings, is settling charges that its severance agreements contained provisions that it in its view might impede employees from communicating directly with the SEC about possible securities law violations. The company has agreed to pay a $265,000 sanction and to engage in other corrective actions as described below.

The specific provision at issue provided:

  • Employee further acknowledges and agrees that nothing in this Agreement prevents Employee from filing a charge with…the Equal Employment Opportunity Commission, the National Labor Relations Board, the Occupational Safety and Health Administration, the Securities and Exchange Commission or any other administrative agency if applicable law requires that Employee be permitted to do so; however, Employee understands and agrees that Employee is waiving the right to any monetary recovery in connection with any such complaint or charge that Employee may file with an administrative agency. (Emphasis added.)

With respect to this bounty waiver, the Commission stated that “by requiring its departing employees to forgo any monetary recovery in connection with providing information to the Commission, BlueLinx removed the critically important financial incentives that are intended to encourage persons to communicate directly with the Commission staff about possible securities law violations.”

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Tipping the Scales: Whistleblower Awarded $3.5 Million For Information That Advanced SEC Investigation

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Last Friday, the SEC announced a whistleblower award of more than $3.5 million to an employee whose tip advanced an SEC investigation into the whistleblower’s company.  According to the Order, while the information the whistleblower provided did not cause the SEC to open a new line of inquiry, the information “significantly contributed” to the SEC’s ongoing investigation by focusing the Commission on a particular issue and providing the agency with additional settlement leverage during its negotiations with the company.

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SEC Awards Third Highest Whistleblower Award to Date

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On July 17, 2015, the SEC announced a whistleblower award of over $3 million to a company insider who provided information that “helped the SEC crack a complex fraud.”  This payout represents the third highest award under the SEC’s whistleblower program to date.  The SEC has made two of the three highest payments to clients of the same law firm – Phillips & Cohen LLP. (The SEC paid roughly $14 million to a whistleblower in October 2013, and nearly $30 million to a foreign whistleblower represented by Phillips & Cohen in September 2014.).  This latest multi-million dollar payout suggests that the SEC’s whistleblower program is in full swing, and that legal representation of whistleblowers may be on the rise.

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Whistle While You Work: SEC Announces First Retaliation Whistleblower Award

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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.”

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Can You Hear the Whistle Blowing?: SEC Punishes Company that Did Not Address Fraud Allegations by Whistleblower

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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.

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Where the Whistle Blows: SEC Invites Circuit Split Over Reach of Dodd-Frank Anti-Retaliation Provision

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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 →

For Whom the Whistle Tolls in 2014

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Momentum for the SEC’s Dodd Frank whistleblower program is growing, and 2014 can be expected to bring continued expansion of the program and the number and types of whistleblower actions initiated by the SEC.  The SEC’s annual report to Congress reported that 3,238 whistleblower tips were received in 2013, up almost 10% from 2012, and awards to whistleblowers who provide information to the SEC are increasing as more substantive tips are received. READ MORE →

Take Heart, Companies Can Win Whistleblower Cases: Two Key Victories Last Week in SOX and Dodd-Frank Cases

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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 →