On May 22, 2017, the U.S. Commodity Futures Trading Commission (“CFTC” or the “Commission”) adopted several additions to its whistleblower rules. Among other things, the amendments expand the Commission’s power to pursue anti-retaliation claims on behalf of whistleblowers and, like the SEC, now prohibit confidentiality agreements that “impede” a whistleblower’s communications with the CFTC. The CFTC first proposed some form of these amendments to its Whistleblower Rules last year.
Supreme Court Asked to Review Scope of Dodd-Frank’s Whistleblower Provision
On April 25, 2017, Digital Realty Trust Inc. asked the United States Supreme Court to decide whether an employee who files an internal complaint (as opposed to a complaint with the SEC) is covered by the Dodd-Frank Act’s whistleblower-protection provision.
CFTC Issues Record-High Whistleblower Bounty Award
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.
In 10-1 Verdict, Jury Finds No FCA Violation by Abbott Laboratories
On April 7, 2016, after just three hours of deliberations following a three-week trial, a federal jury dismissed False Claims Act (“FCA”) claims against Abbott Laboratories brought by a whistleblowing former employee. The jury concluded that the company did not improperly market bile duct stents for off-label uses in vascular procedures.
EEOC Proposes Expansive Enforcement Guidance for Retaliation Claims
For the first time in nearly 20 years, the Equal Employment Opportunity Commission has issued proposed enforcement guidance regarding retaliation claims. According to the EEOC, the revised guidance is necessary in light of several court decisions, including the Supreme Court’s decision in Univ. of Tex. SW Med. Ctr. v. Nassar, 133 S. Ct. 2517 (2013), holding that retaliation claims under Title VII are subject to a “but-for” (as opposed to a “contributing factor”) causation standard. The EEOC also notes in its 76 page proposal that new guidelines are necessary because the percentage of retaliation charges has nearly doubled since 1998, when the agency last issued guidance regarding retaliation claims.
CFTC Whistleblower Awards On The Horizon
In a recent interview with Law360 (subscription required), Chris Ehrman, the Director of the U.S. Commodity Futures Trading Commission’s Whistleblower Office, predicted that the number and size of the CFTC’s whistleblower awards will increase in the near future. Ehrman also said that the agency will conduct “straight marketing” to ensure that potential whistleblowers are aware of the agency’s whistleblower bounty program.
First SEC Whistleblower Award To Former Company Officer
On 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.
Consumer Financial Product Whistleblower Complaints Up Dramatically, SOX Complaints (with OSHA) Down
Since the enactment of Dodd-Frank in 2010, the number of whistleblower complaints filed under the Consumer Financial Protection Act (“CFPA”) has risen significantly while the number of SOX complaints filed with OSHA has largely declined. According to data provided by OSHA, the total number of whistleblower complaints has generally increased over the past ten years. This overall trend is not surprising in light of the greater publicity around whistleblowers in the wake of the passage of Dodd-Frank, employee-favorable rulings by the DOL, and pro-employee rulings by many courts.
SEC’s Second Amicus Brief On Whether Dodd-Frank Protects Internal Reports
On December 11, 2014, the SEC filed an amicus brief in support of Plaintiff-Appellant Mikael Safarian asking the Third Circuit to revive his Dodd-Frank whistleblower claim and endorse the agency’s definition of “whistleblower” as including individuals who only report internally. If the Third Circuit addresses this issue—and it might not since it was not a basis for the district court’s ruling—and adopts the SEC’s position, that would create a circuit split, which could ultimately result in the U.S. Supreme Court issuing a final determination.
Highlights of SEC’s 2014 Annual Report
On November 17, 2014, the Securities and Exchange Commission’s Office of the Whistleblower (“OWB”) released its fourth Annual Report on the Dodd-Frank Whistleblower Program to Congress, which details information on OWB’s activities and bounty payouts for the fiscal year, as described in our posts on the 2012 and 2013 Annual Reports.
In its 2014 report, the SEC highlights that since the inception of the whistleblower program in 2011, the Commission has granted awards to a total of fourteen whistleblowers, and nine of these awards were issued in 2014. The SEC also stressed that the magnitude of the award payments was “record-breaking” in 2014 in that it authorized an award of more than $30 million in September 2014. In addition, the SEC pointed out that it brought its first enforcement action against an employer for retaliating against a whistleblower under Dodd-Frank’s anti-retaliation provision.