Key Takeaways from SEC/DOJ Enforcement Panel
Last week, representatives of the U.S. Securities and Exchange Commission (“SEC”) and the U.S. Department of Justice (“DOJ”) participated in Sandpiper Partners LLC’s Annual SEC/DOJ Enforcement 2016 Panel at the Metropolitan Club. Participants included: Stephanie Avakian (Deputy Director, Division of Enforcement, SEC), Nicole Friedlander (Chief, Complex Frauds and Cybercrime Unit, U.S. Attorney’s Office, Southern District of New York), and Telemachus Kasulis (Deputy Chief, Securities and Commodities Task Force, U.S. Attorney’s Office, Southern District of New York).
Whistleblower’s Multi-Million Dollar Award Affirmed by Illinois Appellate Court
A jury verdict awarding more than $3 million to Plaintiff James Crowley (Plaintiff) on his whistleblower retaliation claim under the Illinois State Official and Employee Ethics Act (Ethics Act) (5 ILCS § 430/15-5, et seq.) Crowley v. Watson, No. 1-14-2847 (Mar. 2, 2016) was upheld by an Illinois Appellate court on March 2, 2016. To read our previous reports on the progression of the case, please click here and here.
Top 10 Whistleblowing And Retaliation Events Of 2015
In 2015, we saw high-profile whistleblower litigation around the country under a variety of statutes (such as SOX and Dodd-Frank) that yielded decisions expanding the scope of protected activity and even limiting defenses to causation. We also saw significant activity from the U.S. Securities and Exchange Commission’s Office of the
ARB Rules That Secret Recording of Workplace Conversations Can Be Protected Whistleblowing Activity
On September 28, 2015, the U.S. Department of Labor Administrative Review Board (“ARB”) held that the recording of workplace conversations can be protected whistleblower activity under the Energy Reorganization Act of 1974 (“ERA”). Franchini v. Argonne National Laboratory, ARB Case No. 13-081 (Sep. 28, 2015).
U.S. Supreme Court Rejects Indefinite Tolling of False Claims Act under Wartime Suspension of Limitations Act; Holds First-to-File Bar Only Applies to Pending Cases
Yesterday, in Kellogg Brown & Root Services, Inc., et al. v. United States ex rel. Carter, 575 U.S. __ (2015), the Supreme Court settled two important questions under the False Claims Act (the FCA). In a unanimous decision authored by Justice Alito, the Court held: (1) the Wartime Suspension of Limitations Act (WSLA) applies only to criminal actions, and thus the statute of limitations under the FCA is not tolled under the WSLA while the United States is at war; and (2) the FCA first-to-file bar prevents the filing of an FCA action only when a related action is pending, not when a related action has been filed but dismissed.
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.
The CFTC’s Whistleblower Program is similar to the SEC’s program in that whistleblowers who voluntarily provide the CFTC with original information about violations of the Commodity Exchange Act resulting in a $1 million or greater recovery are eligible to receive 10 to 30 percent of the monies collected. Ehrman acknowledged that the CFTC’s whistleblower program, which paid its first award in May 2014 and has received only 227 whistleblower tips in fiscal year 2014 versus the SEC’s 3,620, has gotten off to a slower start than the SEC’s program. Ehrman attributes the slow start to the fact that the CFTC, which is limited to regulating the commodities industry, has a “smaller footprint than the SEC.” Ehrman also noted that, unlike the SEC, the CFTC does not have the authority to enforce Dodd-Frank’s anti-retaliation provision.
SEC Awards Compliance Officer Whistleblower Bounty of Approximately $1.5 Million
Earlier today, the SEC announced that it would pay an unidentified compliance officer a whistleblower bounty award of between $1.4 and $1.6 million. This is the second award that the SEC has made to a whistleblower with internal audit or compliance responsibilities. According to the SEC, the recipient of the bounty award “had a reasonable basis to believe that disclosure to the SEC was necessary to prevent imminent misconduct from causing substantial financial harm to the company or investors.”