2014: A Big Year in Whistleblower Laws

The Securities and Exchange Commission (SEC) began the whistleblower program on July 21, 2010 to incentivize people to come forward with information about financial wrongdoing. Under the program, a whistleblower is entitled to 10 to 30 percent of money collected by the SEC based upon the original information voluntarily provided. The program also forbids retaliation against an employee who exposes securities violations her or his company commits.

The Wall Street Journal, recently forecasted the trends in the whistleblower regulations landscape:

  • High SEC awards to be finalized — Although awards thus far have been limited, numerous cases that involve multimillion-dollar payouts are in the pipeline. The numbers of tips are also expected to rise.
  • False Claims Act whistleblower cases gaining momentum — Fraud cases are growing in numbers, complexity and size. Qui tam whistleblower claims under the False Claims Act have already reached record numbers and are expected to increase substantially.
  • Courts to define “whistleblower” more precisely — Several lawsuits pose the question of who is considered a whistleblower under the 2010 Dodd-Frank financial reform act’s anti-retaliation provisions. Of note, the Fifth Circuit Court of Appeals decided that whistleblowers were required to report suspected wrongful conduct to the SEC to gain retaliation protection. Court-watchers anticipate a Circuit Court split on this issue and the potential for review by the U.S. Supreme Court.
  • Supreme Court ruling on whether contractors are protected — A primary issue in Lawson vs. FMR LLC before the U.S. Supreme Court is whether contractors and subcontractors are protected from retaliation as whistleblowers under the 2002 Sarbanes-Oxley Act.
  • Companies encouraging internal whistleblower complaints — Corporations benefit when employees file their complaints internally, rather than reporting wrongdoing to law enforcement or government agencies. For this reason, companies are devising creative rewards — such as bonuses or letters of recognition — as incentives to internal reporting.
  • SEC prioritizing whistleblower retaliation investigations — SEC whistleblower chief Sean McKessy announced that the agency was more aggressively pursuing employers that retaliate against whistleblower employees.

Consult a Texas employment lawyer to learn about how the evolving whistleblower policies affect you.