The air of uncertainty was palpable as current and former members of the U.S. Securities and Exchange Commission’s (SEC) Division of Enforcement spoke at the Securities Regulation Institute’s 44th Annual Conference in Coronado, California earlier this week.  Important questions went largely unanswered about the impact of the recent resignations of both SEC Chair Mary Jo White and Enforcement Director Andrew J. Ceresney, and the future direction of the enforcement program under the new presidential administration and proposed SEC Chair Jay Clayton.  SEC Enforcement staff in attendance steered clear of prognostications, and instead used the conference as an opportunity to reiterate the agency’s ongoing enforcement initiatives and successes from the past year.
Continue Reading Uncertainty Looms Over SEC Enforcement Staff

Business Team Investment Entrepreneur Trading ConceptOn August 30, 2016, the U.S. Commodity Futures Trading Commission (CFTC) proposed amendments to the regulations governing its whistleblower bounty program.  A number of the changes are aimed at more closely aligning the CFTC’s whistleblower program and the parallel program administered by the U.S. Securities and Exchange Commission (SEC), causing speculation that the CFTC plans to up its enforcement game with respect to whistleblower actions.
Continue Reading CFTC Proposes Rules to Align with SEC Whistleblower Program

Creating a circuit split that will likely be headed for resolution by the U.S. Supreme Court, the Second Circuit’s recent decision in Berman v. Neo@Ogilvy LLC expanded the Dodd-Frank Act’s anti-retaliation protections to include employees who were terminated by their companies after internally reporting to their employers concerns about potential violations of the federal securities laws.  The Fifth Circuit reached the opposite conclusion two years ago, in Asadi v. G.E. Energy (USA), L.L.C., holding that Dodd-Frank unambiguously defines “whistleblower” as someone who reports to the SEC.

Continue Reading Second Circuit: Dodd-Frank “Anti-Retaliation” Applies Even When Whistleblower-Employees Have Not Reported to the SEC

[Editor’s Note:  This past Friday, Perkins Coie Partner Lou Mejia, former SEC Chief Litigation Counsel, joined the chair of the SEC Enforcement Division’s Financial Reporting and Audit Group on a panel to discuss the agency’s latest enforcement efforts surrounding financial reporting fraud].

Margaret McGuire, the chair of the SEC Enforcement Division’s Financial Reporting and Audit Group (formerly a “Task Force”), participated in a panel at the American Law Institute’s Accountants’ Liability 2015 Conference in Washington, D.C. on October 2, 2015, during which she outlined the Group’s latest enforcement initiatives.  The Financial Reporting and Audit Group was formed in 2013 with the stated goal to strengthen the agency’s efforts to identify and prosecute securities law violations related to financial reporting and audit failures.  From 2013 to 2014 alone, the percentage of audit firm clients sued by the SEC more than tripled (4% to 14%).
Continue Reading The SEC Turns Up The Heat On Financial Reporting Fraud

Shortly after the July 2010 adoption of the Dodd-Frank Act’s whistleblower program, disputes began arising over whether its anti-retaliation protections apply to employees who report misconduct internally to the company, but not externally to the SEC.  On August 4, 2015, the SEC issued new guidance through an interpretive rule, maintaining that the Act’s whistleblower protections are not limited only to those who choose to report externally to the SEC.

Continue Reading New SEC Guidance: Dodd-Frank Protects Internal Whistleblowers

On April 1, 2015, the Securities and Exchange Commission announced its first enforcement action against a company for using improperly restrictive language in confidentiality agreements allegedly aimed at stifling potential whistleblowers.

The SEC charged KBR Inc. with violating whistleblower protection Rule 21F-17 enacted under the Dodd-Frank Act, which prohibits companies from “imped[ing] an individual

The Securities and Exchange Commission announced this week that it has awarded its first whistleblower payout to a former company officer. The redacted order indicates that the former officer will receive an award between $475,000 and $575,000 for reporting high-quality, original information about a securities fraud that resulted in an SEC enforcement action with sanctions exceeding $1 million. The identity of the officer and the nature of the enforcement action were redacted by the Commission to protect the anonymity of the whistleblower, as required by law.

While the SEC has publicized other significant whistleblower awards over the last two years, this particular announcement serves as an alarm bell of sorts to internal gatekeepers and decision makers responsible for handling allegations of misconduct. The Commission normally will not consider information provided by officers, directors, trustees, or partners who learn about a fraud through another employee reporting the misconduct to be original information derived from independent knowledge or independent analysis. But, an exception exists under Rule 21F-4(b)(4)(v)(C) for reporting information to the Commission more than 120 days after other responsible compliance personnel possessed the information and failed to adequately address the issue.

In the SEC press release accompanying the order, SEC representatives made clear that they will continue to entertain tips from corporate employees at all levels:
Continue Reading SEC Awards First Whistleblower Payout to Former Company Officer

With over 10,000 whistleblower tips since 2011, the Securities and Exchange Commission (“SEC”) recently unveiled its most detailed portrait yet of the whistleblowers who have received awards under the SEC incentive program created by the Dodd-Frank Wall Street Reform and Consumer Protection Act. According to its 2014 SEC Annual Report to Congress on the Dodd-Frank

Somewhat overlooked in the attention to the SEC’s recent $30 million whistleblower award is a more frightening development for public companies.  Just weeks earlier, the SEC announced an award to an employee who performed internal audit and compliance functions.  The SEC said such employees “are on the front lines against fraud and corruption” and offered

DOJ has announced that it will increase efforts to investigate and prosecute criminal actions under the False Claims Act.  In a recent address to the False Claims Act plaintiffs’ bar, Leslie R. Caldwell, Assistant Attorney General for the Criminal Division, described the Criminal Division’s recent successes in prosecuting healthcare and government procurement fraud and its