Recent Blog Posts
- SEC Makes Cybersecurity an Examination Priority for 2016 Businesses of all sizes and in virtually every industry face the daily threat of a data breach or other cybersecurity event, as well as the challenge of managing the potentially catastrophic economic and reputational harm that can flow from such an incident. Further complicating matters is that these threats can come from any number of sources: hackers, phishers, spammers, bot-network operators, spyware and malware authors, insiders, other nations, organized criminal groups, and terrorists. SEC regulations require registered financial institutions—including broker-dealers,... More
- Relaxed Legal Standards That Favor SOX Whistleblowers Do Not Leave Employers Defenseless Section 806 of SOX prohibits publicly traded companies, as well as their subsidiaries, contractors, subcontractors, and agents, from taking adverse personnel actions against employees for reporting activity that they reasonably believe constitutes mail fraud, wire fraud, bank fraud, securities fraud, or a violation of any Securities and Exchange Commission (“SEC”) rule or federal law relating to fraud against shareholders. In recognition of the legislative intent underlying SOX—to provide strong and broad-based protections for employees who report suspected securities violations and... More
- Proposed “Whistleblower Augmented Reward and Nonretaliation Act” Aims to Increase Protections for Financial Industry Whistleblowers On February 25, 2016, Congressman Elijah E. Cummings (D-MD) and Senator Tammy Baldwin (D-WI) introduced the Whistleblower Augmented Reward and Nonretaliation Act of 2016 (or WARN Act of 2016) (pdf). The bill proposes expanded protections for individuals who blow the whistle on financial fraud and securities violations and, if enacted, could have significant implications for financial services employees and employers alike. Specifically, the WARN Act of 2016 aims to strengthen the protections and incentives available to financial crimes whistleblowers by... More
- 2nd Circuit Expands Dodd-Frank Anti-retaliation Protection To Cover Internal Whistleblowing On September 10, 2015, the Second Circuit Court of Appeals ruled in Berman v. [email protected] LLC that an employee who reports an alleged securities violation only to his or her employer, and not to the SEC, is nevertheless covered by the anti-retaliation protections afforded by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank”).
Berman, a former finance director of [email protected], claimed that his employer and its corporate parent, WPP Group USA, Inc., violated the whistleblower protections of... More
- Sixth Circuit Rules That a Reasonable Belief About Unlawful Conduct Is Enough to State a Sarbanes-Oxley Retaliation Claim In its May 28th, 2015 decision in Rhinehimer v. U.S. Bancorp Investments, Inc. (pdf), the Sixth Circuit Court of Appeals ruled that an employee who reports alleged unlawful conduct has engaged in protected activity for the purposes of a retaliation claim under the Sarbanes-Oxley Act (“SOX”), 18 U.S.C. § 1514A, as long as he or she has an objectively reasonable belief that the activity reported is prohibited under SOX. The Sixth Circuit has joined the Second and Third Circuit Courts of Appeal... More
- Eleventh Circuit Rules That State Whistleblower Law Is Preempted By National Bank Act On May 5, 2015, the Eleventh Circuit Court of Appeals ruled in Wiersum v. U.S. Bank, N.A. (pdf) that the National Bank Act (“NBA”), 12 U.S.C. §24 (Fifth), preempted a bank officer’s state law whistleblower claim that he was wrongfully terminated for opposing the bank’s alleged unlawful conduct. This was a first-impression issue for the Eleventh Circuit, and the majority concluded that the state law claim was preempted because it directly conflicted with the power Congress vested in federally chartered banks... More
- 3 Key Points in OSHA’s Final Rule Governing Whistleblower Retaliation Complaints Under Section 806 of the Sarbanes-Oxley Act On March 5, 2015, the Occupational Health and Safety Administration (“OSHA”) issued its “Final Rule” establishing the procedures for handling retaliation complaints brought under Section 806 of the Sarbanes-Oxley Act (“SOX”). Section 806, as amended by Dodd-Frank, protects employees of publicly traded companies, as well as employees of contractors, subcontractors, and agents of publicly traded companies, from being retaliated against for reporting fraudulent activity or other violations of SEC rules and regulations. The Final Rule addresses the comments that OSHA... More
- SEC Finds That Employer’s Confidentiality Agreement Unlawfully Silences Whistleblowers in Violation of the Securities Exchange Act The SEC has become increasingly vigilant and aggressive about what employers say in their confidentiality agreements and the context in which they say it. We previously cautioned employers when FINRA issued a Regulatory Notice cracking down on the use of confidentiality provisions that restrict employees from communicating with FINRA, the SEC, or any other self-regulatory organization or regulatory authority. The SEC has now followed suit in In re KBR, Inc., (pdf) the SEC’s first-ever enforcement action against a company for using... More
- Fourth Circuit Rules That Dodd-Frank’s Ban on Predispute Arbitration Agreements Does Not Invalidate Entire Arbitration Agreement By John F. Fullerton III and Jason Kaufman
In its recent decision in Santoro v. Accenture Federal Services, LLC [pdf], the Fourth Circuit Court of Appeals has joined the Fifth Circuit [pdf] in narrowly interpreting the prohibition against predispute arbitration agreements in the Dodd Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank”) — and employers can breathe a further sigh of relief.
Dodd-Frank amended the Sarbanes-Oxley Act (“SOX”) to, among other things, prohibit agreements requiring predispute arbitration of SOX claims (see 18... More
- The Enforceability of Predispute Arbitration Agreements With Respect to Dodd-Frank and SOX Whistleblower Retaliation Claims Continues to be a Puzzle By John F. Fullerton III and Jason Kaufman
Almost four years after it was enacted in 2010, the full impact of the Dodd Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) on the enforceability of predispute arbitration agreements is not completely clear. Some whistleblower retaliation claims are still subject to mandatory arbitration agreements, while others plainly are not, depending upon when the arbitration agreement was executed, the statute under which the claim is brought, and the jurisdiction in which the... More