The threat posed by corporate whistleblowing in terms of tarnished reputations and costly financial damages has never been greater, said Steven J. Pearlman, partner and co-head of Proskauer’s Whistleblowing & Retaliation Group. “Whistleblowing recently has taken on added urgency in light of new federal rules last year that encourage whistleblowers to report tips to the SEC in exchange for a bounty rather than through internal corporate channels.
Created under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the new Securities and Exchange Commission rules stipulate that whistleblowers receive a bounty of between 10 and 30 percent if their information leads to an enforcement action with penalties of more than $1 million. In the law’s first full year of implementation, more than 3,000 complaints were filed focusing on corporate disclosure and financials, market manipulation, insider trading and other alleged violations.
“Not only are whistleblowing claims growing in number, but they are also expanding in scope based on alleged conduct that has occurred overseas related to the Foreign Corrupt Practices Act,” added Proskauer partner Lloyd B. Chinn, who also serves as co-head of the firm’s Whistleblowing & Retaliation Group. Plus, a number of countries have enacted complex whistleblower-protection laws, such as the UK’s Public Interest Disclosure Act and Bribery Act, all of which vary in material respects from U.S. laws and pose heightened risks to employers.
The new blog provides commentary on a variety of whistleblowing topics important to companies, including:
Messrs. Pearlman and Chinn serve as editors of the blog, along with Harris M. Mufson, an associate in the firm’s Employment Litigation & Arbitration and Whistleblowing & Retaliation Groups.
Proskauer’s Whistleblowing & Retaliation Group litigates claims in federal and state courts, before administrative agencies and in arbitration. Its members have prepared amicus briefs, testified before Congress and published extensively on whistleblowing topics. The group also assists corporate employment counsel and human resource professionals in drafting effective policies and procedures, conducting training, creating incentive structures and providing discipline-related counseling in a manner that minimizes the risk of discrimination and retaliation claims. Working with counsel to take these steps, corporate employment counsel and human resources professionals can help their companies realize a range of benefits, including: positioning the company for government investigations in a manner than minimizes penalties; heightening compliant employee behavior and fostering an ethical environment; minimizing the risk of whistleblower retaliation claims; and strengthening defenses to whistleblower claims where litigation is unavoidable.