On July 19, 2016, the SEC issued an order upholding the SEC Claims Review Staff’s (“CRS”) Preliminary Determination denying three claims for whistleblower awards. The SEC’s order explains how the claimants’ bounty requests were properly denied for failing to meet the SEC’s eligibility requirements. As we have previously discussed here, all but a few whistleblower tips fail to lead to any award; this order serves as a reminder that a whistleblower’s information must have, in the SEC’s view, “significantly contributed to the success of [its] action.” 17 C.F.R. § 240.21F-4(c). Continue Reading
The SEC announced today the departure of Sean X. McKessy, Chief of the SEC’s Office of the Whistleblower. Mr. McKessy was the first to hold that role and started his post in February 2011. Mr. McKessy is credited with developing and establishing the Dodd-Frank whistleblower bounty program from complaint intake to prosecution to the payment of substantial monetary awards to whistleblowers. Continue Reading
On June 22, 2016, Judge Daniels of the Southern District of New York dismissed SOX and Dodd-Frank whistleblower claims, ruling that Plaintiff’s alleged internal complaints did not constitute protected activity, as they did not implicate securities laws, mail fraud, or wire fraud. Diaz v. Transatlantic Reinsurance Co., No. 16-cv-1355. Continue Reading
On June 6, 2016, the Eighth Circuit affirmed the Minnesota District Court’s grant of summary judgment on SOX and Dodd-Frank whistleblower retaliation claims based on the plaintiff’s failure to establish a reasonable belief that the defendant employer engaged in fraud on shareholders. Continue Reading
Yesterday, the SEC issued a stunning $17 million award to a former employee, whose “detailed tip” provided original information to SEC enforcement staff that “substantially advanced their investigation” into the whistleblower’s former employer. The SEC specifically credited the “company insider” with allowing enforcement staff “to conserve time and resources in the investigation, and help[ing] staff to gather evidence supporting the [SEC’s] charges.” Four other claimants who sought awards in conjunction with the same enforcement action saw their claims denied for failing to meet the standard of “voluntarily provid[ing] the Commission with original information that leads to” successful enforcement.
On May 31, 2016, the U.S. Securities and Exchange Commission (“SEC”) issued an order upholding the SEC Claims Review Staff’s (“CRS”) Preliminary Determination denying a claim for a whistleblower award in connection with the enforcement action SEC v. CVS Caremark Corp. Notice of Covered Action 2014-48 (“Covered Action”). This order provides insight into a whistleblower tip that essentially goes nowhere, which is what happens to the overwhelmingly vast majority of them. And this insight is valuable because most attention has been focused on those very few instances where the SEC has in fact awarded a bounty. During the Fiscal Year 2015, the SEC received 3,923 tips, issued orders and determinations on roughly150 whistleblower claims, but only paid out awards to 8 Claimants during that time (or in just over .2 percent of the tips filed). See SEC 2015 Annual Report to Congress on the Dodd-Frank Whistleblower Program. (See our posts on the 2015, 2014, 2013 and 2012 Annual Reports). Continue Reading
On May 20, 2016, the Fourth Circuit affirmed the decision of the ARB, finding that a former employee of Deltek, Inc. (Company) was retaliated against in violation of Section 806 of SOX and entitled to four years’ worth of front pay. Deltek, Inc. v. Dep’t of Labor, No. 14-cv-2415 (unpublished).
Over the past week, the U.S. Securities and Exchange Commission (“SEC”) announced two multi-million dollar awards to whistleblowers who provided the SEC with information in ongoing investigations. Continue Reading
The ARB recently concluded that a former program manager was entitled to recover more than $250,000 in back pay and benefits under Section 806 of SOX based on his discipline and constructive discharge. The ARB clarified that a complainant may have engaged in protected activity by complaining of a failure to comply with state wage payment laws where his or her complaint in that regard is based on a reasonable belief that the employer is committing fraud by making a knowing misrepresentation or misstatement of material facts. Dietz v. Cypress Semiconductor Corp., ARB No. 15-017, 3/30/16 (released 4/6/16). Continue Reading
On April 4, 2016, the U.S. Commodity Futures Trading Commission (CFTC) issued its third and largest award, of more than $10 million, as part of its Dodd-Frank whistleblower program. As was the case with the CFTC’s two previous awards of $240,000 and $290,000—announced in May 2014 and September 2015, respectively—the Agency did not provide details about the whistleblower or the information that led to the enforcement action. Continue Reading