How To Work For The Sec. Of The United States

Transcription

1 Hot Employment Topics in the Securities Industry Office of the Whistleblower: What the 1

2 SEC Office of the Whistleblower part of Dodd-Frank Wall Street Reform Act Stated purpose of the Act to promote the financial stability of the United States and transparency in the financial system Tackles a variety of subjects in an effort to address root causes of economic downturn of 2008 Whistleblower provisions dramatically expand existing protections under Sarbanes-Oxley 2

3 Creation of the SEC Office of Whistleblower July Creation June 13, 2011 Regulations 2012 First Full Year of Operation of Whistleblower Program Staffed by 8 lawyers & 3 paralegals Focus thus far to implement the whistleblower program 3

4 2012 Whistleblower Office Activities Communication with whistleblowers Review & process applications for awards Identify & track enforcement cases based on tips Maintaining & updating OWB website & otherwise inform the public about the Whistleblower program Train the Commission Staff on implementing the Final Rules under the Dodd-Frank Act 4

5 Dire Predictions Whistle While you Work: The Fairytale-Like Whistleblower Provisions of the Dodd-Frank Act & the Emergence of Greedy, the Eighth Dwarf 62 Mercer L. Rev (Summer 2011) Drive employees to frivolous claims of fraud Encourage filing with SEC rather than internally Greater protection for external vs. internal report Dodd-Frank (greater) vs. Sarbanes-Oxley (lesser) 5

6 Dodd-Frank Whistleblowing Requirements Individual Excludes employee of SRO, regulatory agency, DOJ, Public Company Accounting Oversight Board, Law Enforcement Provide Original Information Relating to violation of securities laws In a manner established by regulation of the Commission 6

7 Awards Require: Initiation of covered or administrative action Monetary sanctions must be obtained Money: penalties, disgorgement & interest Award only for funds paid & deposited Award in discretion of Commission 10% 30% Criteria for increase Significance of Information; Assistance by Whistleblower; Law Enforcement Interest; Participation in Internal Compliance System Criteria for Decrease Culpability; Unreasonable reporting delay; Interference with compliance & reporting systems 7

8 2012 Enforcement 3001: Tips, Complaints & Referrals 143: Notices of Covered Action for Enforcement 1st Award - August 12, 2012 $45, Total Amount Paid Out Fledgling Office/Enforcement Agency Effectiveness & Aggressiveness remain to be seen 8

9 Retaliation Protection No discharge, demotion or discrimination against Whistleblower Definition of Whistleblower Possess reasonable belief that information provided relates to possible violation Provide information in manner described Anti-retaliation protections apply whether or not satisfy requirement to qualify for award i.e. whether or not information was provided in a manner established by regulation of the Commission 9

10 Limitations on Protection of Whistleblower No limitations stated in regulations Assume that case law from other whistleblower protection schemes applies Employee alleged retaliation but employer proved negative review and firing would have occurred absent protected activity Galinsky v. Bank of America Corp., DOL ARB, No (released 11/7/12) 10

11 Practice Pointers: Develop a robust complaint process Consider an annual certification Employers/Supervisors should be mindful of potential complaints Create a culture that encourages internal reporting Incentivize Internal Reporting HR s Role Know when to direct employees to the Compliance Department Records Retention Know when to hold them 11

12 Follow up with Compliance to ensure that the employee and Compliance connect After investigation, follow up with employees to ensure there is nothing further they wish to report Remind employees that the Company prohibits retaliation If adverse employment action is taken on the heels of the protected activity proceed cautiously Anti-retaliation provisions protect whistleblowers of both public and private companies from adverse actions 12