Key Cases On SEC Retaliation Claims

The Securities and Exchanges Commission (SEC) has been awarding millions of dollars to whistleblowers in recent years—and the Commission has been awarding larger bonuses, more frequently. In the first decade of the SEC whistleblowing program, it had awarded $942 million to whistleblowers—but more than a third of that—$380 million—was given in just the last year. Given the stakes of a successful claim, contact the experienced securities whistleblower attorneys at the Law Firm of David R. Chase and the Silver Law Group to help you file a report. As experts at the relevant law, we assist whistleblowers in making successful reports, collect financial rewards, and helping them prevent or respond to retaliation. A few recent cases to demonstrate how the laws apply in practice.

In re Paradigm (2015): In the Commission’s first-ever decision relating to a company’s retaliation of a whistleblower, the Commission found that the  whistleblower had suffered “unique hardships” after reporting Paradigm’s wrongdoing to the SEC. The company had “removing the whistleblower from the whistleblower’s then-current position, tasking the whistleblower with investigating the very conduct the whistleblower reported to the SEC, changing the whistleblower’s job function, stripping the whistleblower of supervisory responsibilities, and otherwise marginalizing the whistleblower.”

In response, the Commission awarded the whistleblower more than $600,000 for their information and in compensation for the retaliation. This case is significant because it enumerates some specific actions that the Commission will not tolerate. Also, with the “unique hardships” language, the Commission suggests that it will be expansive, rather than narrow, in evaluating retaliation complaints.

Xanthopoulos v U.S. Department of Labor (2021): In this case, the plaintiff employee had been making internal complaints against his company, and then filed complaints with the Commission. While those were pending, he later filed a claim for retaliation with the Department of Labor for compensation under Sarbanes-Oxley, which was outside of the 180-day window of his discovery of the retaliation. The court held that the short-timeframe for filing still applied; his dealings with the SEC did not toll the time he had to file his complaint with Labor.

Moody v. American National Insurance Co. (2021): In this case, the plaintiff, the owner and president of one company, filed a retaliation complaint (under Sarbanes) against a different company, claiming that the second firm had canceled a contract after he’d reported the second firm’s fraud. The court held that, while Sarbanes does protect contractors and subcontractors of a firm as well as its direct employees, the plaintiff, in this case, was neither; therefore, he wasn’t entitled to file suit.

If fears of retaliation are leading you to be reticent about becoming a whistleblower, or if you’ve already experienced some retaliation, the Silver Law Group and the Law Firm of David R. Chase can help. As securities attorneys with many years of experience, we know how to help you be rewarded, not penalized, for doing the right thing. We represent Wall Street insiders, corporate executives, and compliance officers in a variety of employment disputes including federal court litigation and FINRA arbitration. For a free, confidential consultation about your information, contact us through our website or call us today at (800)975-4345.