Corporate Counsel: Coalition Blows the Whistle on Whistleblower Retaliation

By ANDREW RAMONAS

Labaton Sucharow, the Government Accountability Project and more than 250 other whistleblower advocates are pushing the U.S. Securities and Exchange Commission to improve its program that was created four years ago as part of Dodd-Frank’s efforts to help workers report corporate wrongdoing.

The SEC whistleblower program is under threat from retaliation against tipsters, the whistleblower advocates wrote in a letter to SEC Chairwoman Mary Jo White on Friday. The agency should make whistleblower protections stronger and clearer, hold field hearings on workplace retaliation, and establish a committee that provides advice on tipsters’ reporting and protection, they wrote.

Labaton Sucharow and GAP announced the delivery of the letter, as well as a petition to the SEC asking for whistleblower program clarifications, on Monday, the fourth anniversary of the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The legislation created the SEC whistleblower program, which gives a tipster whose advice leads to an enforcement action against a company 10 to 30 percent of the money the U.S. government obtains from the business.

The coalition, which also includes the International Brotherhood of Teamsters and other labor unions, wrote in its letter that its recommended changes to the whistleblower program would be “good for business and good for our country,” in addition to those blowing the whistle.

“We … write to express our concern for the widespread and growing problem of retaliatory conduct against corporate whistleblowers,” the organizations wrote. “Not merely a threat to public policy, retaliation of this nature has a deleterious effect on corporate culture and growth. And, ultimately, such conduct undermines the force and efficacy of the SEC Whistleblower Program.”

In their letter, the organizations cite studies that show a “quiet and growing epidemic.” For example, they note that a 2012 Ethics Resource Center survey found that 22 percent of workers who reported wrongdoing faced retaliation. In 2007, it was 12 percent.

The petition says employment and whistleblower lawyers have seen numerous examples of employment, confidentiality and severance agreements that try to restrict workers’ access to the SEC whistleblower program. For instance, Kellogg Brown & Root Services Inc. had employees sign statements that barred them from telling government officials or anyone else about misconduct allegations, the submission notes, referencing a claim first reported by The Washington Post.
KBR has denied that it prevents its workers from reporting possible wrongdoing. The government contractor is fighting a False Claims Act case brought by whistleblower Harry Barko, whose lawyers have expressed concerns about the company’s confidentiality agreements.

The coalition of whistleblower advocates wrote in their letter that the SEC should make clear that tipsters actually will get protection when they tell their companies about possible misconduct and that efforts to keep whistleblowing evidence from coming forward are illegal.

“If the SEC doesn’t adopt appropriate countermeasures, gag orders, retaliation and other forms of legal bullying will quickly erode the potential of this powerful investor protection tool,” its whistleblower program, Jordan Thomas, chairman of Labaton Sucharow’s whistleblower representation practice, said in a statement.