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Bounties for Wandering Whistleblowers

BY Philip M. Berkowitz
January 31, 2015

Last year, a number of important new developments, judicial and otherwise, expanded the rights of individuals, even those based overseas, to assert whistleblower rights under the Sarbanes-Oxley Act of 2002 (SOX) and the Dodd-Frank Wall Street Report and Consumer Protection Act of 2010. Namely:

  • In September, the SEC made its largest Dodd-Frank whistleblower bounty award ever ' for $30 million ' to a foreign national who submitted to the SEC from overseas evidence of his employer's alleged unlawful conduct, which occurred entirely overseas.
  • In March, the U.S. Supreme Court issued its groundbreaking decision in Lawson v. FMR, 134 S. Ct. 1158 (2014), expanding Sarbanes-Oxley's whistleblower protection beyond employees of publicly traded companies to employees of company officers and contractors.
  • Sean McKessy, chief of the SEC Office of the Whistleblower, recently vowed to pursue the thousands of cases that have piled up in that agency.
  • The Department of Labor (DOL), for its part, has announced it is seeking, in 2015, an additional $4 million and 27 full-time employees for its whistleblower program.
  • Also in September, Attorney General Eric Holder advocated an increase in the maximum number of permissible whistelblower awards, specifically to incentivize financial fraud whistleblowers. See I. Schuman & J. Lazazzero, “U.S. Attorney General Holder Calls for Increased Bounty Awards for Financial Whistleblowers,” Littler Workplace Policy Update (Sept. 18, 2014, Littler Mendelson, P.C. publication), http://bit.ly/1xysj71.

A Bit of History

Dodd-Frank and SOX provide private causes of action for whistleblowers who suffer retaliation. Both statutes require a plaintiff asserting a whistleblower claim to show that he engaged in protected activity, that he suffered an adverse employment action, and that the adverse action was causally connected to the protected activity.

There are significant differences between the Dodd-Frank and SOX anti-retaliation provisions. SOX requires an employee to file a complaint with the DOL, but Dodd-Frank permits an employee to proceed directly to federal district court. SOX requires an employee to file with the DOL within six months after the alleged retaliation, but the Dodd-Frank statute of limitations can be up to 10 years.

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