Whistleblower Rewards

Over the past century, securities fraud and other fraudulent activities involving publicly traded companies have cost investors – and often taxpayers – trillions of dollars. Such misconduct has also fueled major economic crises, including the 2008 financial crash. That catastrophe led to the passage of the Sarbanes-Oxley Act (“SOX”), a sweeping federal law that focused on preventing, uncovering, and punishing securities fraud and related illegal activities.

Like many other federal agencies, the SEC relies on courageous whistleblowers to report suspected illegal acts, so that it can investigate and pursue enforcement.    

More often than not, whistleblowers work for the companies that are violating securities laws. SOX contains robust anti-retaliation provisions that protect whistleblowers and provide compensation and other relief if their employers are found to have engaged in prohibited retaliation.

Those considering reporting their employers’ SOX violations should consult an experienced whistleblower attorney before doing so. Meanwhile, here are five key things to know about whistleblowing under the Sarbanes-Oxley Act.

One: Companies, Conduct and Whistleblowers Covered By SOX

The rules and requirements of Sarbanes-Oxley, including whistleblower protections, apply to all publicly traded domestic companies, subsidiaries of publicly traded companies and nationally recognized statistical ratings organizations (such as Moody’s Investors Service Inc. or Standard & Poor’s Global Ratings Service).

Section 806 of SOX prohibits retaliation against employees or contractors of Sox-covered companies who engage in protected conduct – that is, individuals who provide information to a supervisor, a federal agency, law enforcement, or Congress that they reasonably believe the employer is engaging in, has engaged in or is imminently about to engage in:

• Securities fraud
• Mail, bank or wire fraud
• A violation of any federal law that relates to fraud against shareholders
• Violations of any SEC rule or regulation

Two: Prohibited Retaliation Under SOX

SOX prohibits any adverse employment action against an employee or contractor who engages in protected conduct as outlined above. Adverse actions may include:

• Discharge
• Demotion
• Suspension or other discipline
• Threats
• Harassment
• Reassignment that affects prospects for promotion
• Reduction in pay or hours
• Any treatment that singles out a whistleblower in the terms and conditions of employment as compared to non-whistleblowing employees

Three: Proof of Retaliation Required for a Successful SOX Retaliation Claim

To prevail in SOX whistleblower retaliation cases, employees must prove:

• They engaged in protected conduct;
• Their employers knew they had engaged in such activity;
• Their employers took adverse employment action against them; and
• The protected whistleblowing activity “was a contributing factor in the unfavorable personnel action.”   

Once an employee shows that their whistleblowing was  a “contributing factor” in the employer’s unfavorable employment action, the employer can defeat the claim only if it “demonstrates by clear and convincing evidence that the employer would have taken the same unfavorable personnel action in the absence of that behavior.”

Four: How and When to File a SOX Retaliation Claim

If you believe you’ve experienced unlawful retaliation under Sarbanes-Oxley, you can file a complaint with the federal Occupational Safety and Health Administration (OSHA). You must file the complaint within 180 days after you first experience or become aware of the prohibited retaliation. Note: this is a short time period, making it important to act quickly to maintain a claim under SOX, preferably with the assistance of an attorney.

Once OSHA receives a complaint, it will review its validity and investigate the alleged retaliation. If the evidence supports your claim of retaliation, and an employer settlement isn’t possible, OSHA will grant various forms of relief and damages. If OSHA doesn’t issue a final decision within 180 days after it receives your complaint, you can file a retaliation claim in federal court.

Five: Remedies and Damages Available for Unlawful SOX Retaliation

If you prevail in your SOX whistleblowing claim, the relief and remedies you may receive include:

• Reinstatement
• Back pay
• Front pay
• Payment for lost benefits
• Special damages, including damages for emotional distress, mental anguish and impairment of reputation
• Attorney fees, expert witness fees and costs

While Sarbanes-Oxley doesn’t provide rewards for reporting unlawful securities-related activities, such compensation may be available through the SEC Whistleblower Program that was established under the Dodd-Frank Act.

Halunen Law: SEC Whistleblower Attorneys

At Halunen Law, we have the utmost respect for whistleblowers who report unlawful activities that defraud shareholders, investors and the general public. Our SEC whistleblower attorneys fiercely protect the rights of those who report misconduct in the securities industry, defend them against prohibited retaliation and fight to get them the maximum amount of compensation available for their courageous efforts.

If you feel you’ve experienced illegal action in your workplace, we encourage you to submit a Case Review Form to our firm. One of our attorneys will review your information, and you’ll receive a response from our firm in a timely manner. There is no charge for this confidential process. And, if we take your case, as a contingency-based law firm, there is no cost unless we win.

We’re here to help you navigate your lawful rights and ensure you get the treatment you deserve. Together, we can hold employers accountable and create a fairer workplace for everyone.

A Partner at Halunen Law, Susan Coler is a member of the Halunen Law False Claims Act (FCA)/Whistleblower Practice dedicated to litigating False Claims Act and other whistleblower cases across the country. She represents whistleblowers who challenge illegal corporate conduct, particularly fraud against the government.

Since 2016, banking and financial services giant Wells Fargo has paid more than $6 billion in fines and restitution for a wide range of fraudulent and illegal activities that affected its customers. In December 2022, Wells Fargo added billions more in penalties to its extraordinary record of misconduct. The Consumer Financial Protection Bureau (CFPB) has ordered it to pay more than $2 billion to consumers and a $1.7 billion civil penalty for legal violations that led to billions of dollars in financial harm to its customers, including the loss of their vehicles and homes.

While certainly a leader of the pack, Wells Fargo is not alone in engaging in fraud, dishonesty and other wrongful or illegal conduct. All too often, this activity manages to fly under the radar and continues without consequences or repercussions. Sometimes, however, people who become aware of such acts – often employees – feel compelled to take a stand and call it out. These brave individuals, called “whistleblowers,” will report violations of the law or expose other disreputable or illegal activities at great risk to their careers and livelihoods. Fortunately, the law not only protects whistleblowers from retaliation and firing, but also establishes mechanisms through which many whistleblowers can obtain compensation for their selfless efforts.

Protections From Retaliation and Potential Rewards for Whistleblowers

Wells Fargo’s illegal acts were uncovered because of a combination of consumer complaints and internal whistleblowers who reported the misconduct through the CFPB’s whistleblower program. The program is just one of many established by law and administered by federal agencies and state governments to encourage whistleblowers to come forward with information regarding illegal activities.

That encouragement generally comes in two forms. Like the CFPB’s program, almost all whistleblower programs and statutes offer protection by prohibiting employers from retaliating against employees who report misconduct or assist the government in any actions or proceedings arising from such activities. These anti-retaliation laws typically allow victims of prohibited retaliation to seek back pay, reinstatement or front pay, compensatory damages and other remedies from their employers.

The other way these programs encourage whistleblowers to speak up is the potential for them to receive a reward—often a percentage of any amounts recovered by the government as a result of the information they provide. That share can amount to a substantial payday for a victorious whistleblower. But, as is the case with the CFPB, not all programs directly provide for whistleblower rewards. However, conduct reported to the CFPB may fall under other reward statutes such as the False Claims Act, the SEC Whistleblower Program, or the Financial Institutions Anti-Fraud Enforcement Act (FIAFEA).
Many whistleblower actions involve exposing corporate misconduct that defrauds federal or state governments, costing taxpayers billions of dollars every year. But plenty of whistleblowers report wrongdoing that directly harms consumers and the general public, as seen in the Wells Fargo case and other high-profile matters. No matter the nature of a company’s malfeasance, those who are brave enough to do the right thing under difficult circumstances and call it out deserve respect, gratitude and support.

Halunen Law: 25 Years of Standing Up for Whistleblowers

If you feel you’ve experienced illegal action in your workplace, we encourage you to submit a Case Review Form to our firm. One of our attorneys will review your information, and you’ll receive a response from our firm in a timely manner. There is no charge for this confidential process. And, if we take your case, as a contingency-based law firm, there is no cost unless we win.

We’re here to help you navigate your lawful rights and ensure you get the treatment you deserve. Together, we can hold employers accountable and create a fairer workplace for everyone.

Few crimes attract as much scrutiny, enforcement efforts and prosecutions by the federal government as money laundering does. And the very nature of money laundering – concealing the source of ill-gotten funds through myriad financial tricks and transactions – makes it one of the more challenging crimes to uncover. That’s why law enforcement often relies on courageous whistleblowers to report and expose such activity. Now, under recently passed federal legislation, those who blow the whistle on money laundering stand a greater chance of receiving compensation for their efforts if they lead to the recovery of ill-gotten funds.

Signed into law as part of the omnibus spending bill in December 2022, the federal Anti-Money Laundering (AML) Whistleblower Improvement Act expands whistleblower rewards and strengthens protections under a previously established AML Whistleblower Program overseen by the U.S. Treasury Department. That program was riddled with loopholes and exceptions that limited its effectiveness and undermined the incentive for whistleblowers to come forward.

Guaranteed Minimum Award for Eligible AML Whistleblowers

As with many, but not all, whistleblower programs, the AML Whistleblower Program offered the promise of financial rewards to individuals who provided information about money laundering activities. But unlike other programs, the AML program didn’t guarantee a minimum amount of compensation for whistleblowers.

For example, the Security and Exchange Commission’s (SEC) program provides that eligible whistleblowers receive 10-30% of the amounts recovered. The AML program, on the other hand, contained no such guarantee. Rather, it only put a limit (30%) on the amount of money a whistleblower could obtain. This meant that an individual whose actions resulted in the federal government’s recovery of tens of millions of dollars could wind up receiving $1 for their efforts – or nothing at all. This toothless reward program hardly made it worth the risk for whistleblowers who put their careers, livelihoods and reputations on the line by reporting illegal activities. Indeed, few whistleblowers came forward under the program, and not a single reward was given during the two years of its existence.

The AML Whistleblower Improvement Act remedies this deficiency by guaranteeing that a qualifying whistleblower receive “not less than 10 percent” of amounts recovered or collected in a government enforcement action. The act also establishes a self-sustaining fund for whistleblower awards financed by the amounts collected in whistleblower-assisted money laundering cases. Previously, the law contained no mechanism for funding the program.

AML Expanded to Include Whistleblowers Who Report Sanctions Violations

The act also expands the AML program to include violations of U.S. sanctions laws such as those imposed on Russian oligarchs after that country’s invasion of Ukraine. This means that rewards and protections are now available to whistleblowers who report this type of illegal conduct.

Protections Against Retaliation

The new and prior AML whistleblower laws protect whistleblowers against retaliation by their employers for reporting illegal activities or otherwise assisting the government in its anti-money laundering efforts. A victim of prohibited retaliation can seek back pay, reinstatement or front pay, compensatory damages and other remedies from their employer.

If you feel you’ve experienced illegal action in your workplace, we encourage you to submit a Case Review Form to our firm. One of our attorneys will review your information, and you’ll receive a response from our firm in a timely manner. There is no charge for this confidential process. And, if we take your case, as a contingency-based law firm, there is no cost unless we win.

We’re here to help you navigate your lawful rights and ensure you get the treatment you deserve. Together, we can hold employers accountable and create a fairer workplace for everyone.

Whistleblowers who call out bribery of foreign officials can reap significant rewards

Never underestimate human creativity when unchecked greed is involved. People who feel unbound by such trifles as ethics, morals, fair play – or the law – will find a way to get what they want. They’ll bend and break the rules in new and creative ways, illegally game the system through novel schemes and take advantage of the complexities of business and the law to wrongfully obtain the money, favors, benefits, information or things of value they covet. Sometimes, however, such corruption involves a more straightforward act: bribery. And bribery is one of many wrongful acts that can form the basis of a whistleblower action.

An Ancient Tradition and a Modern Scourge

Bribery is one of the oldest forms of corruption. In fact, it’s literally the textbook definition of corruption, as the Oxford Dictionary defines it as “dishonest or fraudulent conduct by those in power, typically involving bribery.” Acts of bribery can be found in the historical records of ancient Egypt, Greece and China, among other civilizations. Today, bribery is a persistent pox on the global economy, but on a scope and scale that corrupt officials of the ancient world couldn’t conceive.

The World Bank estimates international bribery exceeds $1.5 trillion annually, or 2% of global gross domestic product. High-ranking officials around the world, including presidents and prime ministers, are regularly embroiled in headline-making bribery scandals. And here in the U.S., bribery cases involving public and elected officials, from zoning board and city council members to law enforcement agents to members of Congress, result in hundreds of prosecutions and convictions each year. Between 2017 and 2021, 987 people were convicted of federal bribery charges, according to the U.S.
Sentencing Commission.

Laws Reward and Protect Whistleblowers Who Expose Bribery and Corruption

Most bribery schemes are simple; the complexities usually involve a cover-up. A person or organization wants something from a public official that may not be obtainable by legal means – a permit, a change in the law, a favorable decision, or, as is often the case, a lucrative government contract. To get the desired outcome, the bribing party will give the official an off-the-books reward – a suitcase full of cash or laundered money, luxury cars or vacations, a promise of a “consulting” job or anything else the official desires.

Several federal and state criminal laws prohibit bribery. The primary federal bribery statute involving U.S. officials prohibits giving or accepting anything of value to or by a public official if the thing is given “with intent to influence” an official act, or if the official receives it “in return for being influenced.”

As with commerce, however, bribery doesn’t have borders in this age of globalization. For U.S. citizens and companies that do business in other countries, where public corruption is widespread, offering bribes can be the cheapest and fastest way to get the government accommodations they want for their business objectives. Federal law bans such bribes as well. The Foreign Corrupt Practices Act (FCPA) generally prohibits the payment of bribes to foreign officials to assist in obtaining or retaining business. 

The U.S. Securities and Exchange Commission (SEC) and the Department of Justice enforce the FCPA’s anti-bribery provisions. The SEC may bring civil enforcement actions against companies and individuals that violate those provisions. Those that are found in violation of the act are subject to substantial fines as well as the forfeiture of any benefits they received because of the violation. 

As noted, many acts of bribery go undetected because both parties will make great efforts to conceal their conduct. That’s one reason the SEC relies on whistleblowers to report violations of the FCPA, among other laws. Those who report bribery and other misconduct through the SEC whistleblower program are often employees of the companies involved. Employees receive protection from retaliation. If a company fires or takes other adverse employment action against a whistleblower, the employee can sue in federal court and seek double back pay (with interest), reinstatement, reasonable attorneys’ fees and court costs.

Just as important, an FCPA whistleblower can receive a percentage of any amounts the government recovers as a result of the information provided. These sums can be significant. For example, in fiscal year 2021 alone, 108 whistleblowers received $564 million in awards through the SEC program. That’s an average of $5.2 million per whistleblower.

If you’re aware of or suspect bribery or other illegal conduct by your employer or individuals at your company and are ready to share what you know, the whistleblower attorneys at Halunen Law stand ready to support you. We’ve recovered millions of dollars in compensation for individuals who had the courage to do the right thing. During a free, confidential consultation, our whistleblower lawyers can answer your questions and help determine if you have grounds to pursue a claim. Contact our firm at 612-605-4098 or submit this Contact Form online.

A Partner at Halunen Law, Susan Coler is a member of the Halunen Law False Claims Act (FCA)/Whistleblower Practice Group. She represents whistleblowers who challenge illegal corporate conduct, particularly fraud against the government. As an MSBA Labor and Employment Law Specialist, Susan has also brought successful retaliation claims in connection with FCA/qui tam cases and as stand-alone actions

A few years back, a news article reported that a meeting of corporate defense attorneys had called out whistleblowers as primarily “disgruntled employees.” This remark reflects a too-common perspective that whistleblowers are a nuisance rather than a contributor to the well-being of our businesses and our government. Far from being a nuisance, whistleblowers are champions of ethical conduct and play a powerful role in prodding businesses to do what is right. Are whistleblowers often disgruntled employees?  Of course. Read More…