Washington, DC – On the fourth anniversary of the Wall Street Reform and Consumer Protection Act, better known as Dodd-Frank, Labaton Sucharow LLP, the Government Accountability Project (GAP) and a growing coalition, representing more than 250 organizations and nearly two million citizens, announce they have submitted petitions with the Securities and Exchange Commission (SEC) demanding a strengthened Whistleblower Program.
The SEC Whistleblower Program offers eligible whistleblowers the ability to report anonymously, robust employment protections and the opportunity to earn substantial monetary awards – regardless of nationality. A recent Wall Street survey, commissioned by Labaton Sucharow, found that financial services professionals were aware of unethical and illegal behavior in the workplace (23%), willing to report possible violations with the protections and incentives offered by the Program (89%) and knew about the existence of the Program (60%, up from 49% just one year earlier).
“As awareness and interest in the SEC Whistleblower Program and other similar programs has grown, they have come under stealth attack by Corporate America,” said Jordan Thomas, Chair of the Whistleblower Representation Practice at Labaton Sucharow and a former Assistant Director in the SEC’s Enforcement Division. “If the SEC doesn’t adopt appropriate counter-measures, gag orders, retaliation and other forms of legal bullying will quickly erode the potential of this powerful investor protection tool.”
The first petition (rulemaking proposed by Labaton Sucharow and GAP, summary here) addresses unscrupulous legal maneuvers employed by many companies trying to silence potential whistleblowers. Examples include: preventing employees from consulting independent legal counsel, requiring notice of external reporting, demanding waivers of any future whistleblower awards, and threatening lawsuits to enforce secrecy agreements. These and other troubling legal tactics effectively topple each of the three pillars of the SEC Whistleblower Program – anonymous reporting, employment protections and monetary awards. This petition provides companies with clear guidance regarding these problematic employment agreements. The petition also urges the SEC to issue a policy statement regarding the current scope of employment protections available to SEC whistleblowers and its intent to prosecute companies that retaliate against them.
“Virtually every corporation in America has internal policies that encourage employees to report wrongdoing and promise to protect them from retaliation for doing so,” said Tom Devine, GAP Legal Director and author of The Corporate Whistleblower’s Survival Guide. “The problem is the reality gap between what these organizations say and what they do, because they have not been held accountable. Currently, corporations have little or nothing to lose from legal bullying. The worst that can happen is they won’t get away with it. The SEC can change this.”
“Retaliation against corporate whistleblowers is a quiet and growing epidemic,” said Thomas. In the 2013 National Business Ethics Survey, the Ethics Resource Center found that retaliation has increased sharply since Congress passed stronger legal rights to protect whistleblowers. A near record-setting 21% of employees who reported misconduct faced retaliation, up from 12% in 2007. More than one-third of those who declined to report misconduct pointed to fear of retaliation as the reason for their silence.
In recognition of this serious problem, a broad coalition of organizations, including Americans for Financial Reform, the National Employers Lawyers Association, and many other prominent groups, has submitted a second petition (non-rulemaking) asking the SEC to: launch a series of public hearings to discuss the problem of workplace retaliation and ways to increase reporting, create an Advisory Committee on Whistleblower Reporting and Protection, and engage in appropriate rulemaking to clarify and strengthen whistleblower protections. A full list of coalition members is available here.
To celebrate the 25th anniversary of the passage of the Whistleblower Protection Act, GAP encourages the public to attend the Whistleblower Summit for Civil and Human Rights in Washington D.C. beginning on July 28, 2014. As part of that effort, on July 30, National Whistleblower Appreciation Day, GAP is producing a panel discussion on financial whistleblowing held on Capitol Hill. More on that panel can be found at the link provided above.
About the Campaign Organizers
Labaton Sucharow has been one of the country’s premier law firms comprehensively representing businesses, institutional investors and consumers in complex securities and business litigation for more than 50 years. It was the first law firm in the country to establish a practice exclusively focused on protecting and advocating for whistleblowers who report possible securities violations to the SEC. Building on the Firm’s market leading securities litigation platform, the Whistleblower Representation Practice leverages a world-class in-house team of investigators, financial analysts and forensic accountants with federal and state law enforcement experience to provide unparalleled representation for whistleblowers. Labaton Sucharow is consistently among the top plaintiff litigation firms based upon its rankings in Chambers & Partners, The Legal 500, The National Law Journal’s Plaintiff Hot List and Benchmark Plaintiff.
The Government Accountability Project is the nation’s leading whistleblower protection and advocacy organization. A non-profit, non-partisan 501(c)(3) organization that litigates whistleblower cases, GAP helps expose wrongdoing to the public and actively promotes government and corporate accountability. Since its founding in 1977, GAP has represented over 6,000 whistleblowers in the court of law and in the court of public opinion, including hundreds of whistleblowers who have reported financial misconduct. GAP is also a leader in campaigns to enact or defend all federal whistleblower protection statutes, including those in the Sarbanes-Oxley and Dodd-Frank laws.