Securities Law Commons^™

Protecting Whistleblowing (And Not Just Whistleblowers), Evan J. Ballan

Michigan Law Review

When the government contracts with private parties, the risk of fraud runs high. Fraud against the government hurts everyone: taxpayer money is wasted on inferior or nonexistent products and services, and the public bears the burdens attendant to those inadequate goods. To combat fraud, Congress has developed several statutory frameworks to encourage whistleblowers to come forward and report wrongdoing in exchange for a monetary reward. The federal False Claims Act allows whistleblowers to file an action in federal court on behalf of the United States, and to share in any recovery. Under the Dodd- Frank Act, the SEC Office of …

To Be A "Whistleblower," Or Not To Be A "Whistleblower? " That Is The Question-Whether 'Tis Nobler In The Mind Of The Courts To Suffer For Reporting Wrongdoing To The Sec Or Employers Internally: Examining The Recent Circuit Split Regarding The Definition Of A Whistleblower Under Dodd-Frank, Luke I. Landers

The Journal of Business, Entrepreneurship & the Law

Under the current state of the law, the circuit courts are split over whether an employee must report corporate wrongdoing directly to the Securities and Exchange Commission (SEC), or report wrongdoing to a company’s management in order to receive whistleblower protection under Dodd–Frank. The resolution of this circuit split not only will have implications for American employees caught in situations similar to the fiction above, but also will provide a prime opportunity for the Supreme Court to clarify how courts are to understand the interpretive and deferential relationship between the language of legislative statutes and their corresponding bureaucratic regulations. In …

Asadi: Renegade Or Precursor Of Who Is A Whistleblower Under The Dodd-Frank Act?, Mystica M. Alexander, John O. Hayward, David Missirian

Pace Law Review

Whistleblowers have a long and honorable history. From Ralph Nader blowing the whistle on the hazards of GM’s Corvair in Unsafe at Any Speed1 in the 1960’s to Jeffrey Wigand in 1996 exposing the duplicity of the tobacco industry, whistleblowers have put conscience ahead of career and personal success to expose corporate fraud and wrongdoing. Not surprisingly, they have had to endure ridicule and ostracism as well as financial hardship. Legislation has sought to protect them from retribution, often with mixed success. The most recent legislative effort is the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) that allows …

Buying Voice: Financial Rewards For Whistleblowing Lawyers, Nancy J. Moore, Kathleen Clark

Nancy J Moore

“Buying Voice: Financial Incentives for Whistleblowing Lawyers”

Kathleen Clark and Nancy J. Moore

Abstract

The federal government relies increasingly on whistleblowers to ferret out fraud, and has awarded whistleblowers over $4 billion under the False Claims Act and the Dodd-Frank Wall Street reform and Consumer Protection Act. May lawyers ethically seek whistleblower rewards under these federal statutes? A handful of lawyers have tried to do so as FCA qui tam relators. They have not yet succeeded, but several court decisions suggest that they might be able to do so under confidentiality exceptions to state ethics law, which several courts have …

Better Bounty Hunting: How The Sec's New Whistleblower Program Changes The Securities Fraud Class Action Debate, Amanda M. Rose

Northwestern University Law Review

No abstract provided.

Form Vs. Function In Rule 10b-5 Class Actions, Amanda M. Rose

Vanderbilt Law School Faculty Publications

The Supreme Court’s widely anticipated decision last term in Halliburton Co. v. Erica P. John Fund, Inc. did little to change the fundamental landscape of securities fraud litigation in the United States. Rule 10b-5 class actions premised on the “fraud-on-the-market” presumption of reliance may still be brought, although it is now clear that defendants may present evidence of lack of price distortion to rebut that presumption at the class certification stage. Halliburton does, however, raise a variety of new questions that will keep plaintiffs’ lawyers and defense counsel fighting for years to come. Determining the answers to these questions will …

Unfinished Business: Dodd-Frank's Whistleblower Anti-Retaliation Protections Fall Short For Private Companies And Their Employees, Chelsea Hunt Overhuls

The Journal of Business, Entrepreneurship & the Law

The Sarbanes-Oxley Act of 2002 (“SOX”) revolutionized the world of securities law whistleblowing. It encouraged employees to reveal corporate fraud by providing federal anti-retaliation protection to incentivize such reports. Securities law whistleblowing was transformed a second time in 2010 when Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”). Under Dodd-Frank, employees that report information to the Securities and Exchange Commission (“SEC”) are not only provided federal anti-retaliation protections but also are eligible for a hefty bounty. Two major differences separate these statutes: (1) SOX is limited to employees of companies who are subject to the reporting …

Better Bounty Hunting, Amanda Rose

Vanderbilt Law School Faculty Publications

The SEC’s new whistleblower bounty program has provoked significant controversy. That controversy has centered on the failure of the implementing rules to make internal reporting through corporate compliance departments a prerequisite to recovery. This Article approaches the new program with a broader lens, examining its impact on the longstanding debate over fraud-on-the-market (FOTM) class actions. The Article demonstrates how the bounty program, if successful, will replicate the fraud deterrence benefits of FOTM class actions while simultaneously increasing the costs of such suits — rendering them a pointless yet expensive redundancy. If instead the SEC proves incapable of effectively administering the …

Does Sarbanes-Oxley Protect Whistleblowers? The Recent Experience Of Companies And Whistleblowing Workers Under Sox, Megan E. Mowrey, L. Stephen Cash, Thomas L. Dickens

William & Mary Business Law Review

The Sarbanes Oxley Act of 2002 (SOX) attempts to prevent fraud in the business activities of public companies. SOX includes regulations designed to protect whistleblowing employees that may be triggered if workers allege fraudulent activity by their employers, and, in response, their employers retaliate. This Essay discusses the strength of the whistleblowing protection provided by SOX, the conduct covered by the SOX whistleblower provisions, and specifically the application of the law by the courts

Getting The Word Out About Fraud: A Theoretical Analysis Of Whistleblowing And Insider Trading, Jonathan Macey

Michigan Law Review

The purpose of this Article is to show that corporate whistleblowing is not analytically or functionally distinguishable from insider trading when such trading is based on "whistleblower information," that is, the information a whistleblower might disclose to the authorities. In certain contexts, both insider trading and whistleblowing, if incentivized, would reduce the incidence of corporate pathologies such as fraud and corruption. In light of this analysis, it is peculiar that whistleblowing is encouraged and protected, while insider trading on whistleblower information is not only discouraged but criminalized. Often, insider trading will be far more effective than whistleblowing at bringing fraud …

Internal Whistleblowing And Sarbanes-Oxley Section 806: Balancing The Interests Of Employee And Employer, Kevin Rubinstein

NYLS Law Review

No abstract provided.

A Business Ethics Perspective On Sarbanes-Oxley And The Organizational Sentencing Guidelines, David Hess

Michigan Law Review

This Article assesses the ability of Sarbanes-Oxley and other recent changes in the law and stock exchange listing requirements to reduce the incidence of fraud and to increase the reporting of financial misconduct. It begins by examining the individual decision-makers within a corporation and analyzing their intentions and behaviors under the Theory of Planned Behavior. It then examines the ability of the organization to influence the employees' intentions and behaviors through codes of ethics and compliance programs, and finds growing support for the usefulness of integrity based compliance programs. Finally, the Article considers how the Sarbanes-Oxley legislation and Organizational Sentencing …