Posts in Whistleblower Claims.

The SEC announced its second enforcement action in a week against a company using severance or confidentiality agreements requiring employees to waive whistleblower bounties or their right to bring a qui tam action.

In this week's settled action, the SEC fined publicly-traded Health Net $340,000 for having used severance agreements (over 4 years) that expressly allowed government reporting and cooperation in investigations but required waiver of monetary awards and qui tam actions. The offending agreements included waivers of:

"the right to file an application for award for ...

The SEC has fined an Atlanta company $265,000 for using various severance agreements restricting whistleblower activities.

The Dodd-Frank Act added '34 Act § 21F encouraging whistleblower programs. The SEC adopted Rule 21F-17 providing:

(a) No person may take any action to impede an individual from communicating

directly with the Commission staff about a possible securities law violation,

including enforcing, or threatening to enforce, a confidentiality agreement . . . with respect to such communications.

The Company's severance agreements contained confidentiality and ...

There's a developing circuit split over whistleblower standing for retaliation claims. A decision this week extended that split to U.S. district courts within Tennessee, too. In Verble v. Morgan Stanley Smith Barney, LLC, No. 3:15-CV-74-TAV-CCS (Dec. 8, 2015 USDC EDTN), the Eastern District of Tennessee joined with the Fifth Circuit view that Dodd-Frank whistleblowers must report to the SEC to have standing. An earlier decision from the Middle District of Tennessee had sided with the Second Circuit's view, deferring to the broader language of the SEC regulations that would ...

United States Deputy Attorney General Sally Q. Yates issued a September 9 memo directing increased focus on individual culpability in matters of corporate wrongdoing. The memo highlights six policy directives - some existing, some new - targeting individuals involved in corporate wrongdoing, in addition to fines and sanctions against the corporation itself. Yates said individual accountability is important to deter future illegality, incentivize good corporate behavioral, ensure proper responsibility, and promote public confidence. Many would say the last is first: The ...
The Sixth Circuit this week rejected the "definitively and specifically" standard that had required a Sarbanes-Oxley whistleblower's "reasonable belief" to closely track each element of the legal cause of action for the fraud she reports has occurred. The Circuit instead aligned with more recent authority requiring only a subjective belief that is objectively reasonable, given the whistleblower's training and experience. Sarbanes-Oxley makes it illegal for a public company to retaliate against an employee who reports fraud or assists in investigations or enforcement ...
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