Whistleblower Protection Blog : Whistleblower Lawyer & Attorney : National Whistleblower Legal Defense and Education Fund : Whistleblower Protection, Fraud Claims : Washington DC

The SEC Office of the Whistleblower post Notices of Covered Action where a final judgement or order, by itself or together with other prior judgments or orders in the same action issued after July 21, 2010, results in monetary sanctions exceeding $1 million.

Subject to the Final Rules, individuals who voluntarily provided the Commission with original information after July 21, 2010 that led to the successful enforcement of a covered action listed below are eligible to apply for a whistleblower award.

Once a Notice of Covered Action is posted, individuals have 90 calendar days to apply for an award.

View the updated list on the continuation of this blog post. Updated 5-17-2013.

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The SEC Office of the Whistleblower post Notices of Covered Action where a final judgement or order, by itself or together with other prior judgments or orders in the same action issued after July 21, 2010, results in monetary sanctions exceeding $1 million.

Subject to the Final Rules, individuals who voluntarily provided the Commission with original information after July 21, 2010 that led to the successful enforcement of a covered action listed below are eligible to apply for a whistleblower award.

Once a Notice of Covered Action is posted, individuals have 90 calendar days to apply for an award.

View the updated list on the continuation of this blog post. Updated 4-23-2013.

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Today, the U.S. Court of Appeals for the Third Circuit issued a major precedential decision in the case of Wiest v. Tyco Electronics Corp., establishing the standards for protecting corporate whistleblowers under the Sarbanes-Oxley Act. In a 2-1 split ruling, the Court held that corporate whistleblowers who have a "reasonable belief" that securities laws are being violated are protected under the Sarbanes-Oxley Act (SOX).  The Court rejected arguments raised by Tyco and the Chamber of Commerce that the SOX whistleblower law only protected employees whose disclosures "definitively and specifically" related to a "violation of a statute."

The whistleblower, Mr. Jeffrey A. Wiest, had worked at Tyco for 31 years, and was fired after rejecting expense payments that "failed to satisfy accounting standards."  

The National Whistleblower Center filed an amicus brief in the case supporting Mr. Wiest, and Stephen M. Kohn, a partner in the law firm of Kohn, Kohn and Colapinto, LLP, co-argued the case before the Appeals Court on behalf of the NWC.  He joined Mr. Wiest's counsel, Richard Angino, in oral argument to strongly urge the court to reject the "definitively and specifically" standard. 



Mr. Kohn highlighted the importance of today's decision by stating: ”This is a major victory for SOX whistleblowers. Employees performing their duties discover many corporate frauds and violations and then report concerns to their supervisor. Whistleblower laws, such as SOX, would lose their effectiveness if this common form of raising reasonable concerns was not protected.”

A copy of the decision is available here. 

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The SEC Office of the Whistleblower post Notices of Covered Action where a final judgement or order, by itself or together with other prior judgments or orders in the same action issued after July 21, 2010, results in monetary sanctions exceeding $1 million.

Subject to the Final Rules, individuals who voluntarily provided the Commission with original information after July 21, 2010 that led to the successful enforcement of a covered action listed below are eligible to apply for a whistleblower award.

Once a Notice of Covered Action is posted, individuals have 90 calendar days to apply for an award.

View the updated list on the continuation of this blog post.

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The SEC Office of the Whistleblower post Notices of Covered Action where a final judgement or order, by itself or together with other prior judgments or orders in the same action issued after July 21, 2010, results in monetary sanctions exceeding $1 million.

Subject to the Final Rules, individuals who voluntarily provided the Commission with original information after July 21, 2010 that led to the successful enforcement of a covered action listed below are eligible to apply for a whistleblower award.

Once a Notice of Covered Action is posted, individuals have 90 calendar days to apply for an award.

View the updated list on the continuation of this blog post.

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By Guest Columnist: Donna Boehme

Principal at Compliance Strategists LLC and editor of the weekly CS Newsflash (and former chief compliance and ethics officer at two leading multinationals). Follow her on Twitter @DonnaCBoehme.

Originally Published in Corporate Counsel (January 14, 2013)

As companies head into 2013 facing yet another year of increasing and complex compliance and ethics challenges, here’s a threshold question for the Board of Directors: Does your chief compliance officer have the empowerment, independence, seat at the table, line of sight, and resources to do the job?

Following is a “boardworthy” sample of big developments from 2012 that should give some boards and C-suites (and you know who you are) pause:

1. Morgan Stanley Declination

Companies and CCOs have been waiting a long time to see public recognition and credit for a preexisting compliance program. In 2012, the U.S. Department of Justice decided not to prosecute Morgan Stanley for flagrant FCPA violations by an employee in China, citing robust compliance program elements that illustrated the firm’s strong efforts to prevent and detect wrongdoing. It was just like the Federal Sentencing Guidelines contemplate, and a powerful “show and tell” example for CCOs to discuss with management and boards. More like this in 2013, please.

2. Wal-Mart Mexican Bribery Scandal

Unpack many of the big corporate scandals of the last five years and very few feature a strong, well-positioned, empowered, and experienced CCO voice in the C-suite. (Actually, I can’t think of any, but please write and tell me if you can). In Wal-Mart’s case, the compliance function reported to the legal department, but according to The New York Times reportage, the company’s top lawyer participated in a C-suite decision to “hush up” a too-hot investigation by sending it back to the very same Mexican GC who allegedly approved the bribes in the first place. It was a decision that ignored a compliance officer’s strong recommendation for an expanded independent investigation. Wal-Mart is Exhibit A for an independent, empowered CCO.

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On October 5, 2012, the Third Circuit U.S. Court of Appeals conducted oral arguments in Wiest v. Lynch, a case that tests the scope of protection for whistleblowers under the 2002 Sarbanes Oxley Act (SOX). Harrisburg, Pennsylvania, attorney Richard Angino argued the case for Jeffrey Wiest.  He generously shared his time with attorney Stephen M. Kohn, Executive Director of the National Whistleblowers Center (NWC). The panel of three judges consisted of Chief Judge Theodore A. McKee, Judge Kent A. Jordan and Judge Thomas I. Vanaskie. In the earlier arguments that day, Judge Jordan was the most active questioner of lawyers on both sides of each case.  The Court was running late as the questioning exceeded the time allotted for all the attorneys.

You can read the continuation of this blog post for a more detailed report of the judge's questions and the issues that arose.  However, I want to emphasize a moment at the end of Stephen Kohn's rebuttal argument.  Judge Jordan had been questioning all the attorneys on whether any whistleblower protection can protect disclosures employees make as part of their official duties.  Stephen Kohn answered that many frauds and violations are discovered by employees performing their duties and raising a concern to their supervisor. Therefore, whistleblower laws would lose much of their effectiveness if they did not protect this most common form of raising concerns. He cited the nuclear whistleblower case, Mackowiak v. University Nuclear Systems, Inc., 735 F. 2d 1159, 1163 (9th Cir. 1984) (employers may not discharge employees engaged in quality control because they do their jobs too well). He got Judge Jordan to agree that establishing protected activity is "a low bar." Stephen Kohn emphasized how the Department of Labor opinion in Sylvester v. Parexel International LLC, ARB No. 07-123, ALJ Nos. 2007-SOX-39 and 42 (ARB May 25, 2011), is entitled to deference, and how the legislative history showed that in enacting SOX, Congress relied on the Third Circuit's decision in Passaic Valley Sewerage Comm. v. U.S. Department of Labor, 992 F.2d 474, 478-79 (3d Cir. 1993). Past the official time limit, he even pointed to the roots of protecting employee communications to supervisors in the old Mine Safety Act cases, Phillips v. Interior Bd. of Mine Operations Appeals, 500 F.2d 772, 778 (D.C. Cir. 1974), cert. denied, 420 U.S. 938 (1975), and Munsey v. Federal Mine Safety and Health Review Comm’n, 595 F.2d 735, 741 (D.C. Cir. 1978). Finally, Judge Jordan said, "I gotcha" and the argument concluded. To me, the persistence of the argument, Stephen Kohn's determination to draw on all the available authority, and his keen understanding of the practicalities of whistleblower protection, made it possible for us to believe that all three judges might agree to reinstate Jeffrey Wiest's case. It will probably be months before we get the Court's opinion, but I am already convinced that this oral argument had a positive effect on the outcome of this case and on the state of the law.  Bravo!

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This morning, the U.S. Supreme Court issued an order inviting the Solicitor General of the United States to file a brief "expressing the views of the United States" in Lawson v. FMR.  This is a good sign that the Supreme Court is interested in the case, and could accept the case if the Solicitor General explains that Supreme Court review would be beneficial.  As the First Circuit decision was terrible for whistleblowers, today's order is a welcome sign.

Stephen Kohn, Executive Director of the National Whistleblowers Center (NWC) and I filed the only amicus brief to the Supreme Court in this case.  Before the First Circuit, however, the Solicitor of Labor and the Securities and Exchange Commission (SEC) both filed amicus briefs urging the First Circuit to find that the Sarbanes Oxley Act (SOX) did cover employees, like Jackie Lawson and Jonathan Zang, who work for contractors of publicly traded companies. After the First Circuit panel majority rejected these arguments, the Department of Labor's Administrative Review Board issued a blistering decision reaffirming how SOX must cover the employees of contractors. Now, the Solicitor General can just copy from any of these amicus briefs, or the ARB's decision in Spinner, to make an excellent argument about why the public interest depends on the Supreme Court accepting the Lawson case for review.

There is no time limit on the Solicitor General to submit this brief, but where the ARB, the Solicitor of Labor, and the SEC are all in agreement, hopefully it will not take long for the Solicitor General to file this brief.  Then the Supreme Court will have another opportunity to review this case.

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The Securities and Exchange Commission (SEC) Office of the Whistleblower has today issued seven (7) new Notices of Covered Actions.  Each of these notices is an opportunity for any  whistleblowers to file a claim.  If a whistleblower believes that his or her information contributed to the SEC's collection in the action, then they have ninety (90) days to file a Form WB-APP with the SEC Office of the Whistleblower.  For the notices issued today, the deadline to file Form WB-APP is December 31, 2012. The corporations and individuals from whom the SEC recovered the new available funds are Oracle Corporation, Wyeth LLC, Pfizer Inc., Wells Fargo Brokerage Services LLC, SJL Investment Management LLC, Irwin Boock, Stanton B. J. DeFreitas, Nicolette D. Loisel, Roger L. Shoss, Jason C. Wong, Nancy Shao Wen Chu, Elizabeth Tsang, aka Yuen Yee Tsang, Eric Jon Strasser, Shawn Patrick McMurty, and Stanley J. Kowalewski.  If you submitted information about any of these penalty payers, now is the time to consult your lawyer about filing SEC Form WB-APP.

By the way, tomorrow is the last day to file claims for awards against Quantek Asset Management, LLC, Bulltick Capital Markets Holdings, LP, Javier Guerra, and Ralph Patino, James Roland Dial, Evan Nicolas Jarvis, and Alexander W. Ellerman, James Clements and Zeina Smidi, Conrad M. Black, F. David Radler and Hollinger, Inc., New Futures Trading International Corporation and Henry Roche, U.S. Sustainable Energy Corp. and John H. Rivera.

The full list of currently open award opportunities is available in the continuation of this blog post.

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By Guest Columnist: Donna Boehme
Principal at Compliance Strategists LLC and editor of the weekly CS Newsflash (and former chief compliance and ethics officer at two leading multinationals). Follow her on Twitter @DonnaCBoehme.

Originally Published in Corporate Counsel (September 20, 2012) 

Last week’s outsized bounty award of $104 million to former UBS AG banker-turned-whistleblower Bradley Birkenfeld has commentators lighting up the Twitterverse with outrage and the Wall Street Journal calling Birkenfeld’s tale one of “sordidness piled on sordidness.” Seems his 2007 testimony regarding thousands of U.S. tax dodgers netted the Internal Revenue Service a $780 million fine and the names of 5,000 potential tax cheats from the Swiss banking giant—not to mention potential recovery of over $5 billion in unpaid taxes.

This has resulted in what one of Birkenfeld’s lawyers has called "the largest whistleblower reward issued to a single individual.” What has got so many folks’ knickers in a wad is not just the record-setting, eye-popping monetary reward, but the fact that Birkenfeld himself had a spectacular role in the scheme, at one point famously smuggling diamonds for a client in a tube of toothpaste. And what’s more, he lied to the IRS and served 30 months in jail before collecting his reward. Judging by much of the commentary, this is being seen by many as whistleblower protection gone horribly awry and the end of civilization as we know it.

As a former chief compliance officer who has been in the trenches for 20-plus years, I’d like to offer an alternative view, starting with some undeniable truths about whistleblowers (and, by the way, we need another term for individuals who report misconduct, but I digress.) To all the outraged commentators, please have a glass of Pinot and unwad your knickers. Go ahead, I’ll wait.

OK, on to the undeniable truths about corporate whistleblowers:

UNDENIABLE TRUTH NO. 1

Whistleblowers are not always model citizens (gasp). Sometimes they are very close to the misconduct—that’s how they know about it. This is the same reason that in developing the Dodd-Frank whistleblower program, the U.S. Securities and Exchange Commission declined to exclude whistleblowers involved in the misconduct unless criminally convicted: it makes no sense to automatically exclude the people most likely to have the information. Ever heard of the U.S. Department of Justice’s antitrust leniency program?

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