SOX

Can You Hear The Whistle Now? SEC Proposes New Rule Amendments To Bolster the Bounty Program

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On June 28, the Securities Exchange Commission (“SEC” or “Commission”) voted to propose amendments to its whistleblower program. As SEC Chair Jay Clayton explained, the proposed changes would “strengthen the whistleblower program by bolstering the Commission’s ability to more appropriately and expeditiously reward those who provide critical information that leads to successful enforcement actions.” The SEC issued a press release outlining the proposed rules, which would: (1) provide the Commission with additional tools in making whistleblower awards; (2) clarify the requirements for anti-retaliation protection under the whistleblower statute; (3) provide interpretive guidance to help clarify the meaning of “independent analysis”; (4) increase efficiencies in the whistleblower claims review process; and (5) clarify various miscellaneous policies and procedures. READ MORE →

CEO’s Whistleblower Claims “Rest On Feet Of Clay”: Seventh Circuit Affirms Dismissal Of SOX and Dodd-Frank Case

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Earlier this month, the Seventh Circuit affirmed dismissal of a CEO’s whistleblower retaliation claims in a decision that should provide corporate defendants ammunition to fight SOX and Dodd-Frank whistleblower cases going forward.

In Verfuerth v. Orion Energy Systems, Inc., No. 16-3502 (7th Cir. Jan. 11, 2017), the plaintiff, founder and former CEO of Orion, claimed that Orion’s Board of Directors terminated him for cause in retaliation for making whistleblower complaints about perceived fraud on SEC reports and other managerial decisions.  Orion asserted that it terminated Verfuerth for numerous legitimate reasons, including falling stock prices, Verfuerth’s intimidating leadership style, high rates of senior management turnover, and other business disagreements such as reimbursement for Verfuerth’s costly divorce. 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 →

Bounty-ful Pay Day and Former SEC Whistleblower Chief’s Move To Plaintiff’s Firm May Lead to Whistleblower Claim Increase

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Two recent events may spur a rise in the number of high quality whistleblower tips filed with the SEC.  First, on August 30, 2016, the SEC announced that it had awarded a $22.4 million bounty to a former Monsanto financial executive, whose report of alleged accounting fraud led to the company’s $80 million settlement with the SEC in February.  This recent award brings the total amount paid out to whistleblowers by the SEC since the inception of the bounty program in 2011 up to $107 million, more than half of which has been paid out in 2016 alone.  This most recent award follows a string of seven and eight-figure awards in 2016, most notably topping a $17 million bounty in June 2016, and is second in size only to a September 2014 award of $30 million.  The $22.4 million award represents approximately 28% of Monsanto’s $80 million payment, just shy of the 30% award cap established for recoveries exceeding $1 million.

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It’s All a Matter of Degree – Fourth Circuit Upholds Four-Year Front Pay Award and Tuition Reimbursement in SOX Case

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*This post was drafted with contribution from Ashley Gambone, law clerk.

Affirming a SOX victory for an employee, the Fourth Circuit in a 2-1 decision in Gunther v. Deltek upheld a Department of Labor award of four-years of front pay to a former financial analyst of a software firm and also affirmed an award of tuition reimbursement for a four-year, full time, college degree program.  The Fourth Circuit’s Gunther decision discusses the standards for proving or disproving a causal connection in SOX cases, for meeting the after-acquired evidence standard to cut off damages, and for proving entitlement to front pay and other damages under SOX.

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Court-Sanctioned Employee Theft? Self-Help Discovery May Be Protected Activity In Discrimination Cases

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Recently in Verdrager v. Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, P.C., No. SJC-11901, 2015 WL 10937776 (Mass. May 31, 2016), the Supreme Judicial Court of Massachusetts held, as a matter of first impression, that self-help discovery “may in certain circumstances constitute protected activity” under the state anti-retaliation statute, provided that, “the employee’s actions are reasonable in the totality of the circumstances.”

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Bonus Points: ARB Upholds Whistleblower Order Challenging Bonus Plan

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The Department of Labor’s Administrative Review Board (“ARB”) recently upheld an order finding a semiconductor company had constructively discharged a manager who complained the company’s bonus plan violated state wage and hour laws, and in doing so, broadly interpreted the protections offered under the Sarbanes-Oxley Act (“SOX” or “Act”).

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Where Have You Gone Dennis Kozlowski? Third Circuit Dismisses Tyco Employee’s Whistleblower Claim Over Excessive Corporate Spending

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On February 2, 2016, the Third Circuit affirmed the dismissal of a long-running SOX whistleblower suit filed by Jeffrey Wiest, a former accounts payable manager for Tyco Electronics.  The decision is the first in which the Third Circuit has defined the “contributing factor” causation standard for SOX retaliation cases and provides helpful guidance on the issue.

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So You Want to Accept That Board Position? One More Reason to Pause: Directors Can Be Personally Liable Under Sarbanes-Oxley and Dodd-Frank

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On October 23, 2015, in a suit filed by Bio-Rad’s former general counsel Sanford Wadler, the United States District Court for the Northern District of California issued a decision granting in part and denying in part Defendants’ motion to dismiss in Wadler v. Bio-Rad Labs, Inc. (No. 15-CV-02356-JCS, 2015 WL 6438670 (N.D. Cal. Oct. 23, 2015), holding, among other things, that corporate directors may be held personally liable for retaliating against a whistleblower under both the Sarbanes-Oxley Act of 2002 (SOX) and the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank).

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Sixth Circuit Affirms $250K Victory to SOX Whistleblower and Provides Broad Interpretation of SOX

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On May 28, 2015, the Sixth Circuit in Rhinehimer v. U.S. Bancorp Investments, Inc. affirmed a $250,000 jury verdict in favor of a former financial advisor for U.S. Bancorp Investments (“USBII”) who alleged that he had been terminated in violation of the Sarbanes-Oxley Act (“SOX”) whistleblower provisions.  In doing so, the Sixth Circuit rejected the “definitively and specifically” standard for proving protected activity under SOX and abrogated its prior SOX decision in Riddle v. First Tennessee Bank Nat’l Assoc., 497 F. App’x 588 (6th Cir. 2012) to the extent it relied upon the standard.

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