U.K. Begins to Advance Protection of Whistleblowers

U.K. Begins to Advance Protection of Whistleblowers Jes Staley, the American CEO of Barclays went after whistleblowers the American way – “get that rat!” This time the U.K.’s Prudential Regulation Authority and Financial Conduct did something about it. They called it an ethical breach and put pressure on Barclays to do something. Barclays issued a statement stating it reprimanded Mr. Staley and will make a “significant” cut to his bonus. How does this balance out? The whistleblower loses his or her career and the executive who cause that damage may lose some part of their future bonus. In the U.S., the SEC insists on revealing the name of the whistleblower if there is a settlement. The SEC justifies its policy by claiming it is merely trying to buttress internal reporting. In my experience, corporations circle the wagons when there is credible whistleblowing. Corporate counsel interrogates and human resources attempts to find legal grounds to terminate. Investigators comb the whistleblower’s computer and office looking for something negative. Usually whistleblowing is a career ending exercise in the U.S. The U.K. does not give rewards to whistleblowers. The SEC does but refuses to allow anonymous filings. It allows temporary anonymity if the whistleblower uses an attorney to file the claim. Like many CEOs, Mr. Staley apparently thinks whistleblowers are disloyal and he felt in this case it was “an unfair personal attack.” After he was told it was not appropriate to inquire into the identity of the whistleblower, he continued to pressure his internal security investigator for the information. A U.S. law-enforcement agency was asked to help. Consider Wells Fargo Bank. It...

National Whistleblower Appreciation Day

CELEBRATING WHISTLEBLOWING Where were you on July 30, 2016? The United States Senate unanimously declared July 30, 2016 as “National Whistleblower Appreciation Day” in a resolution adopted on July 7, 2016. It stated “. . . in 1777, before the passage of the Bill of Rights,10 sailors and marines blew the whistle on fraud and misconduct harmful to the United States. . . . the Founding Fathers unanimously supported the whistleblowers in words and deeds, including by releasing government records and providing monetary assistance for reasonable legal expenses necessary to prevent retaliation against the whistleblowers. . . . on July 30, 1778, in demonstration of their full support for whistleblowers, the members of the Continental Congress unanimously enacted the first whistle blower legislation in the United States that read: ‘Resolved, That it is the duty of all persons in the service of the United States, as well as all other [of] the inhabitants thereof, to give the earliest information to Congress or other proper authority of  any misconduct, frauds or misdemeanors committed by any officers or persons in the service of these states, which may come to their knowledge’” The 2016 resolution further provided: “. . . . it is the public policy of the United States to encourage, in accordance with Federal law (including the Constitution, rules, and regulations) and consistent with the protection of classified information (including sources and methods of detection of classified information), honest and good faith reporting of misconduct, fraud, misdemeanors, and all other crimes to the appropriate authorities at the earliest time possible. . .” The resolution was cosponsored by Grassley and Wyden...

Whistleblower Protection: Dodd-Frank and SOX

by John Jacob Tollefsen1The author practices law in Oregon, Washington, California, Texas, D.C., and New York. He has been lead counsel on several SOx § 806 cases including Tides v. The Boeing Co., 644 F.3d 809 (C.A.9, Wash. 2011), cert. den. 132 S.Ct. 518 (2011) and Reid v The Boeing Company, 2009-SOX-27 (ARB Mar. 30, 2012).  Overview of Whistle Blower Protection under Dodd-Frank and SOX including the SEC Bounty Program The Sarbanes Oxley Act of 2002 (“SOx”) § 8063SOx § 806 is codified as 18 U.S.C. § 1514A(a)(1). was designed to protect certain employees who reasonably believe they are reporting a violation of a law, rules, or regulation listed in § 806. Due to drafting issues and the hostility of courts and administrative judges, few whistleblowers prevailed. The Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010 add additional protections designed to increase the whistleblowers chances of success. This article provides a brief overview of federal whistleblower protection under Sox and Dodd-Frank including the Securities and Exchange Commission bounty program.2There are numerous other whistleblowing protection provisions in federal law that may be helpful in a particular case including aircraft safety and environmental issues that are not covered by this article. Prepare to have your career ruined As a practical matter, whistleblowing protection has not been favored by judges. This is to be expected. For many people, a “whistleblower” is a “snitch”.4The English language is rife with pejorative terms for whistleblower like informer, fink, stoolpigeon, stoolie, sneak, blabbermouth, tattler, tattletale, squealer, mole, betrayer, rat, and rat fink. Even lawyers fight rules (like ABA proposed ethical rules) making reporting of...

False Claims Act Whistleblower

The False Claims Act provides that ¨Any employee who is discharged; or demoted; or suspended; or threatened; or harassed; or in any manner discriminated against is entitled to bring an action for reinstatement with same seniority; 2 times back pay with interest; special damages; emotional distress; attorneys’ fees and costs. No punitive damages are available. An “employee” includes: temporary worker; and demoted worker; and discharged worker. An independent contractor is not an employee. A false claims act whistleblower should expect harassment in the form of counterclaims filed in the retaliation action; industry blackballing; unprovable but real retaliation; reassignment for ostensibly unrelated reasons; other non-compensatable harassment; possible losing the case; and paying attorney fees and costs if the retaliation case is deemed frivolous. More on False Claims Act Whistleblower Protection Washington State False Claims Act Qui Tam (False Claims Act) procedure False Claims Act (statute) Share...

Environmental whistleblower

The Importance of Being Earnest: An Environmental Whistleblower’s Guide to Protection Under SOx § 806 and Dodd-Frank By John J. Tollefsen 1The author practices law in Oregon, Washington, and New York. He has been lead counsel on several SOx § 806 cases including Tides v. The Boeing Co., 644 F.3d 809 (C.A.9, Wash. 2011), cert. den. 132 S.Ct. 518 (2011) and Reid v The Boeing Co., 2009-SOX-27 (ARB Mar. 30, 2012). The Sarbanes Oxley Act of 2002 (“SOx”) § 8064SOx § 806 is codified as 18 U.S.C. § 1514A(a)(1).protects certain employees who reasonably believe they are reporting a violation of a law, rules, or regulation listed in § 806. Their belief must be subjectively and objectively reasonable.2E.g., Tuttle v. Johnson Controls Battery Div., 2004-SOX-76 (ALJ Jan. 3, 2005), an ALJ explained: “Protected activity is defined under SOX as reporting an employer’s conduct which the employee reasonably believes constitutes a violation of the laws and regulations related to fraud against shareholders. While the employee is not required to show the reported conduct actually caused a violation of the law, he must show that he reasonably believed the employer violated one of the laws or regulations enumerated in the Act. Thus, the employee’s belief ‘must be scrutinized under both subjective and objective standards.’ Melendez v. Exxon Chemicals Americas, 1993-ERA-6 (ARB July 14, 2000)”. The employee must earnestly and sincerely believe in good faith that there is a violation. The courts and administrative law judges (“ALJs”) have been generally hostile to § 806, adding additional barriers to recovery with the result that few claimants have been protected. This paper argues that claims under...

Court Limits Whistleblower’s Attorney Fees

Overseas Shipholding Group 2010 – limits on contingency fees -Limits Whistleblower’s Attorney Fees This case was cited by the SEC in its bounty program comments in an attempt to limit attorney fees UNITED STATES of America, Appellee, v. OVERSEAS SHIPHOLDING GROUP, INC., 625 F.3d 1(C.A. 1; Mass; 2010) Before BOUDIN, DYK, and THOMPSON, Circuit Judges. Of the Federal Circuit, sitting by designation. DYK, Circuit Judge. Zack Hawthorn (“Hawthorn”) appeals from a district court decision limiting Hawthorn’s legal fees under two contingent fee agreements. The district court barred Hawthorn from receiving a fee in excess of $25,000 under a contingent fee agreement with Benedict Barroso (“Barroso”) and barred Hawthorn from recovering any fee at all under a contingent fee agreement with John Altura (“Altura”). We conclude that the district court did not err in finding Hawthorn’s contractual fee amounts with respect to both clients to be excessive. However, we conclude that the district court abused its discretion in disallowing any fee from the representation of Altura. We hold that Hawthorn should receive a fee of $25,000 for each client and accordingly affirm-in-part and reverse-in-part. II. This case arises out of a government investigation in six judicial districts into allegations that Overseas Shipholding Group, Inc. (“OSG”) had for years engaged in the practice of discharging oil from its vessels in American waters and falsifying mandatory ship records to conceal the discharges, in violation of the Act to Prevent Pollution from Ships (“APPS”), 33 U.S.C. § 1908(a). In September of 2005, Barroso worked aboard the M/T Pacific Ruby (“the Pacific Ruby “), a tanker ship owned and operated by OSG. On September...