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Federal Judge Rules Whistleblowers Allowed to Send Confidential Documents to SEC

A federal judge in San Diego recently ruled that whistleblowers can be protected for sending confidential information to the SEC for the purposes of reporting fraud.

BofI Federal Bank, a San Diego institution, had moved for summary judgment of whistleblower protections placed on a formal internal auditor of the bank, Charles Matthew Erhart. With this decision, U.S. District Judge Cynthia Bashant denied most of those motions.

Erhart started his job as an internal auditor with the bank in September 2013. He ended up reporting the bank to the SEC for failing to comply with SEC reporting requirements and for working with an unregistered securities dealer. In his reports, he forwarded sensitive files to the agency, including confidential data and client information. The bank accused Erhart of violating his nondisclosure agreements and various fraud legislation, which led to Erhart filing his whistleblower retaliation countersuit.

Judge Bashant said public policy protects whistleblowers who report institutions that defraud the federal government, which means the bank is not allowed to sue Erhart for reporting potential violations to the SEC. Bashant said that while Erhart should not be allowed to disclose confidential information simply because he is pursuing whistleblower retaliation claims, he can do it if it is “reasonably necessary” in the pursuit of his claim.

Bashant did grant summary judgment to BofI on six claims, but denied it on nine.

Protections abound for whistleblowers

This is just the latest court decision that highlights the numerous protections that currently exist in the federal government for whistleblowers. Today’s whistleblowers are afforded more government protections than at any other point in history.

For more information and guidance on how to pursue a claim for whistleblower retaliation, meet with an experienced Dallas attorney at Whistleblower Law for Managers.

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