House Democrats urged the Securities and Exchange Commission to better protect whistleblowers. In a letter signed by the Democratic members of the House Committee on Financial Services, the SEC was urged to be more vigilant in protecting whistleblowers from retaliation.
The 2010 Dodd Frank Wall Street Reform and Consumer Protection Act gave the SEC to bring charges against businesses and individuals that retaliate against whistleblowers who cooperate with the agency. The Democrats letter comes on the heels of an enforcement action brought earlier this summer by the SEC against a hedge fund advisory firm. In that case, Paradigm Capital Management and owner Candace King Weir agreed to pay $2.2 million to settle the charges.
Although the SEC’s whistleblower protection provisions have been on the books since 2010, this was the first action taken by the agency for retaliation.
Democrats on the House Financial Services Committee believe that many companies are hiding behind confidentiality agreements. Some companies tie severance pay to an employee’s continued compliance with these agreements. The committee members say that the success of the whistleblower program may be “fleeting if corporate actions that chill the environment for whistleblowers are not promptly and adequately addressed.” The committee members didn’t cite any studies or claim statistics but said that anecdotal litigation against whistleblowers is increasing. The letter also quoted a recent Washington Post article. [A copy of the House letter is available here.]
Nationally, whistleblower retaliation is a problem. While many businesses are smart enough to not fire a whistleblower, some harass whistleblowers until they quit or marginalize them by assigning them meaningless tasks and limiting their ability to advance.
The Paradigm action was significant because it permitted a whistleblower retaliation claim to advance even though the whistleblower was still on the payroll. In the Paradigm case, the whistleblower was a trader who alerted the SEC to conflicts of interest in a hedge fund business. Although still on the payroll, the trader was demoted from head trader to an administrative assistant and stripped of any ability to advance.
There are many whistleblower lawyers willing to file an IRS, SEC or federal False Claim Act on your behalf. Few law firms have the training and experience to assist with related retaliation claims, however. We take whistleblower protection extremely seriously. If you believe you may have a claim, give us a call. Our consultations are no fee, no obligation and completely confidential. Need more information? Contact attorney Brian Mahany at or by telephone at (414) 704-6731 (direct).