secOn March 2, 2015, the SEC announced  an expected award of $475,000 to $575,000 to a former company officer “who reported original, high-quality information about a securities fraud that resulted in an SEC enforcement action with sanctions exceeding $1 million.”  The officer reported information to the SEC more than 120 days after other responsible compliance personnel at the company in possession of the information purportedly failed to adequately address the issue.  This is the first of its kind under the SEC’s whistleblower program, and the first award announced this year.

The SEC’s Order explained that, although officers who learn of fraud through other employees or the company’s internal compliance processes are generally not eligible for whistleblower awards under the Dodd-Frank bounty program because such information is not derived from the officer’s “independent knowledge or independent analysis,” the officer here could receive an award due to the exception for officers who report to the SEC more than 120 days after other responsible individuals at the company were in possession of the information and failed to take appropriate actions to address the issue.   In this regard, the SEC explained that the former officer

“reported the information to other responsible persons at the entity . . . or such persons knew about it, at least 120 days before [the former officer] reported the information to the Commission.”

The Director of the SEC’s Division of Enforcement indicated that the SEC values tips of this nature, stating:

“[c]orporate officers have front-row seats overseeing the activities of their companies, and this particular officer should be commended for stepping up to report a securities law violation when it became apparent that the company’s internal compliance system was not functioning well enough to address it.”

Sean McKessy, Chief of the SEC’s Office of the Whistleblower, similarly expressed the SEC’s desire to continue to obtain such information from high-level officers, stating:

“[r]eceiving information and cooperation from company insiders is particularly useful in the early detection of securities fraud, and we will continue to leverage whistleblower information to help combat securities law violations and better protect investors and the marketplace.”

Mr. McKessy also stressed that “companies must have rigorous internal compliance programs that adequately address and remedy potential violations voiced by their employees as well as by their officers, directors, or other individuals.”

This most recent award highlights the importance of effective internal compliance procedures that provides for robust training for all levels of employees; an appropriate tone at the top and in the middle with respect to ethics and compliance; rigorous audit protocols and processes; triage and escalation processes; and structures to ensure that the audit committee, chief compliance officer, and compliance committees are fully informed and appropriately empowered.

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Photo of Steven J. Pearlman Steven J. Pearlman

Steven J. Pearlman is a partner in the Labor & Employment Law Department, where he is Head of the Restrictive Covenants, Trade Secrets & Unfair Competition Group and Co-Head of the Whistleblowing & Retaliation Group.

Employment, Whistleblower, Restrictive Covenant and Trade Secret Practice.…

Steven J. Pearlman is a partner in the Labor & Employment Law Department, where he is Head of the Restrictive Covenants, Trade Secrets & Unfair Competition Group and Co-Head of the Whistleblowing & Retaliation Group.

Employment, Whistleblower, Restrictive Covenant and Trade Secret Practice. Steven’s national practice focuses on defending companies in federal and state courts and arbitration against claims of: discrimination, retaliation and harassment, including claims brought by high-level executives; whistleblower retaliation; restrictive covenant violations; theft of trade secrets; and wage-and-hour violations (including class, collective and PAGA actions).

Illustrating his versatility, Steven has successfully handled bench and jury trials in multiple jurisdictions (e.g., Illinois, California, Florida and Texas); defended one of the largest Illinois-only class actions in the history of the federal courts in Chicago; and prevailed following his oral arguments before the Seventh Circuit and state appellate courts. Steven brings his litigation experience to bear in counseling clients to minimize risk and avoid or prepare for success in litigation.

Investigations. Reporting to boards of directors, their audit committees, CEOs and in-house counsel, Steven conducts sensitive investigations and has testified in federal court. His investigations have involved complaints of sexual harassment involving C-suite officers; systemic violations of employment laws and company policies; and fraud, compliance failures and unethical conduct.

Thought Leadership and Accolades. Steven was named Lawyer of the Year for Chicago Labor & Employment Litigation in the 2023 edition of The Best Lawyers in America. He was also named as One of the Top 10 Impactful Labor & Employment Lawyers in Illinois for 2023 by Business Today. He is a Fellow of the College of Labor and Employment Lawyers. Chambers describes Steven as an “outstanding lawyer” who is “very sharp and very responsive,” a “strong advocate,” and an “expert in his field.” Chambers also reports that “He is someone who can navigate the twists and turns of litigation without difficulty. Steven is great with brief-writing, crafting arguments, and making sure the client is always happy.”

Steven was 1 of 12 individuals selected by Compliance Week as a “Top Mind.” Earlier in his career, he was 1 of 5 U.S. lawyers selected by Law360 as a “Rising Star Under 40” in the area of employment law and 1 of “40 Illinois Attorneys Under Forty to Watch” selected by Law Bulletin Publishing Company. Steven is a Burton Award Winner (U.S. Library of Congress) for “Distinguished Legal Writing.”

Steven was appointed to Law360’s Employment Editorial Advisory Board and selected as a Contributor to Forbes.com. He has appeared on Bloomberg News (television and radio) and Yahoo! Finance, and is often quoted in leading publications such as The Wall Street Journal.

The U.S. Chamber of Commerce has engaged Steven to serve as lead counsel on amicus briefs to the U.S. Supreme Court and federal circuit courts of appeal. He was appointed to serve as a Special Assistant Attorney General for the State of Illinois in employment litigation matters. He has presented with the Solicitor of the DOL, the Acting Chair of the EEOC, an EEOC Commissioner, Legal Counsel to the EEOC, and heads of the SEC, CFTC and OSHA whistleblower programs. He is also a member of the Sedona Conference, focusing on trade secret matters.

In 2024, Steven received the Excellence in Pro Bono Service Award from the United States District Court for the Northern District of Illinois and the Chicago Chapter of the Federal Bar Association.

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Photo of Noa Baddish Noa Baddish

Noa M. Baddish is a senior counsel in the Labor & Employment Law Department. She is a member of the Sports, Employment Litigation & Arbitration, Class and Collective Action, Wage & Hour and Whistleblower & Retaliation Practice Groups. Noa is also the Administrative…

Noa M. Baddish is a senior counsel in the Labor & Employment Law Department. She is a member of the Sports, Employment Litigation & Arbitration, Class and Collective Action, Wage & Hour and Whistleblower & Retaliation Practice Groups. Noa is also the Administrative Lead of the Class, Collective and Complex Action Practice Group.

Noa specializes in defending employers in various industries, such as sports, media and entertainment, on a wide variety of matters. With a particular focus on class and collective actions, Noa has successfully defended numerous organizations against complex employment-related claims. Noa’s approach to class and collective action defense is rooted in a thorough understanding of both federal and state employment laws. Noa’s expertise spans topics ranging from wage and hour disputes to discrimination and harassment claims. Noa is well-versed in the intricacies of class and collective action procedures, which allows her to provide comprehensive defense strategies tailored to each client’s objectives and circumstances.

Noa also has experience navigating proceedings before government agencies such as the Equal Employment Opportunity Commission (“EEOC”), including Commissioner Charges and those involving complex, large-scale issues such as claims of pattern or practice discrimination.

Noa also works closely with clients to develop proactive compliance strategies, focused on minimizing the risk of litigation. Noa has particular expertise in advising clients on how to conduct reorganizations or restructuring of businesses, otherwise known as “RIFs” and is experienced in all of the technicalities that come along with these types of group-wide employment actions.

Noa was recognized as a Rising Star by New York Super Lawyers from 2015 through 2020. She has authored and contributed to several articles and newsletters on employment and labor topics, including “Managing Legal and Reputational Risks When Right-sizing Your Workforce,” LegalDive (December 2022), “Mediating Employment Disputes,” LexisNexis (June 2019), “Supreme Court Says that Equitable Tolling Cannot Extend Rule 23(f) Deadline,” Proskauer’s Employee Benefits & Executive Compensation Blog (February 2019), “FLSA Turns 80: The Evolution of ‘Employee’ Status,” LAW360 (June 2018), and “CFTC Whistleblower Awards On The Horizon,” Proskauer’s Corporate Defense and Disputes Blog (May 2015).

Prior to coming to Proskauer, Noa served as Assistant General Counsel to the New York City Mayor’s Office of Labor Relations and defended the Mayor and City agencies against both employee grievances at arbitration and improper practice petitions before the Board of Collective Bargaining. Prior to that, she was a Law Clerk to Judge Ellen L. Koblitz of the Appellate Division of the New Jersey Superior Court.

While in law school, Noa served on the Executive Board as Notes and Articles Editor of the Fordham Urban Law Journal.

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