Whistleblower

Whistleblowers bravely step forward in many industries, such as financial, healthcare, aerospace, and numerous other businesses. IMcP’s whistleblower lawyers represent whistleblowers and others reporting wrongdoing.

Most employees in Texas are at-will but still have protections for certain types of whistleblower claims. There are certain Texas and federal statutes and agencies that provide whistleblower protections. For example, the Texas Whistleblower Act provides protections for certain reports (a hotly contested term) by public employees. Another protection is the Sabine Pilot doctrine, based on the seminal 1985 opinion from the Supreme Court of Texas. Under that line of cases, an employee in Texas may be protected if he or she is fired in retaliation for refusing to do an illegal act. IMcP’s whistleblower lawyers have litigated based on that doctrine – including related to employees refusing to do an illegal act related to laws enacted during the COVID-19 shutdown.

There are also federal protections. IMcP’s whistleblower lawyers have represented and litigated on behalf of whistleblowers under Sarbanes Oxley Act (“SOX”) and the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”). Awards in SOX and under Dodd-Frank have included millions of dollars on behalf of employees in a range of industries, such as healthcare, oil and gas, manufacturing, and other businesses. SOX covers:

• employees, officers, and agents of publicly traded companies (companies issuing securities registered under section 12 of the Securities Exchange Act of 1934 or required to file reports under section 15(d) of the Securities Exchange Act of 1934);
• employees of any subsidiary or affiliate of a publicly-traded company whose financial information is included in the consolidated financial statements of such company;
• employees of contractors or subcontractors of public companies, including the attorneys and accountants who prepare public companies’ SEC filings;[i] and
• employees of nationally recognized statistical rating organizations (as defined in section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c).

The SEC, after passage of the Dodd-Frank Act, implemented rules that enabled the SEC to take legal action against employers who retaliate against whistleblowers. That was also intended to prevent discrimination or retaliation (such as action against an employee, such as discharge, demote, suspend, harass) related to the terms and conditions of employment. The SEC’s fines and enforcement actions have been significant. For example, in September 2023, the SEC announced settled charges against a registered investment adviser for “raising impediments to whistleblowing by requiring employees to sign agreements prohibiting the disclosure of confidential corporate information to third parties, without an exception for potential SEC whistleblowers, and by requiring departing employees to sign releases affirming that they had not filed any complaints with any government agency in order for the employees to receive deferred compensation.” The RIA paid $10 million to settle the SEC’s charges. In November 2023, the SEC announced settled charges against a company for allegedly violating internal accounting controls requirements relating to its stock buybacks. The SEC’s order found violations and required the company pay a civil penalty of $25 million. Other SEC announcements in 2023 included the following:

• August 2023: SEC Awards Whistleblower More Than $18 Million
• August 2023: SEC Awards More Than $104 Million to Seven Whistleblowers
• May 2023: SEC announced the largest-ever award, nearly $279 million, to a whistleblower
• December 2022: SEC Awards More Than $37 Million to Whistleblower

The Financial Industry Regulatory Authority (FINRA) created a dedicated Office of the Whistleblower. FINRA’s goal was to “expedite the review of high-risk tips by FINRA senior staff and ensure a rapid response for tips believed to have merit.” That office was intended to supplement FINRA’s enforcement actions, which before 2009, resulted in multiple millions of dollars in fines and restitutions after investor complaints or anonymous or insider tips.

The Commodities Futures Trading Commission’s Whistleblower Program has also been effective in handling whistleblower complaints. The CFTC reports that, since 2014, it has “awarded approximately $365 million to whistleblowers” and that “enforcement actions associated with those awards have resulted in monetary relief totaling more than $3 billion.”

Contact IMcP if you want guidance on possibly “blowing the whistle” against your employer or any other bad actors.