On September 29, 2016, the Securities and Exchange Commission (the “SEC”) announced that casino-gaming company International Game Technology (“IGT”) agreed to pay a $500,000 penalty for firing an employee who reported to senior management and the SEC that the company’s financial statements might be distorted.
The whistleblower retaliation case is the second of its kind since the Dodd-Frank Act authorized the agency to bring retaliation charges. According to the SEC order, the employee had been a director of an IGT division since 2008 and received positive performance reviews throughout his time with the company and never received any sort of discipline or corrective action.
The whistleblower received a favorable evaluation in the 2014 mid-year review and was deemed an employee on the rise, according to the order. Shortly after that review, the whistleblower raised concerns to his managers, to the company’s internal complaint hotline, and to the SEC that IGT’s publicly-reported financial statements may have been misstated. Approximately three months after the whistleblower raised his concerns, according to the order, IGT terminated him.
The Dodd-Frank Act established the SEC whistleblower program in 2011, and it entices “whistleblowers” to come forth and help the SEC identify possible fraud and other violations much earlier than might have been possible, consequently reducing harm to investors, preserving the integrity of U.S. capital markets, and swiftly holding perpetrators of unlawful conduct accountable, according to the SEC Office of the Whistleblower website.
The whistleblower anti-retaliation provisions were added, similarly, by the Dodd-Frank Act, as indicated above. The provisions are in Section 21F(h) of the Securities Exchange Act of 1934.
Whistleblower anti-retaliation is an important component of the whistleblower program. Without such protection, the intention of the whistleblower program would be severely undermined; why would anyone come forth and blow the whistle if the company he or she is blowing the whistle on can freely “get back” at the whistleblower?
The whistleblower program offers confidentiality, protection from retaliation, and rewards fraud tipsters for reporting wrongdoing that leads to an SEC enforcement action in which over $1 million in sanctions is ordered. The award can range anywhere from 10 to 30 percent of the sanctions, according to the website.
To date, more than $107 million has been awarded to 33 whistleblowers who became eligible for an award by voluntarily providing the SEC with original and useful information that led to a successful enforcement action.
Scott L. Silver, managing partner of the Silver Law Group, was an early proponent of the legislation and authored a primer on the SEC Whistleblower Program. Our legal team includes former defense attorneys and government prosecutors now working to protect whistleblowers.
Scott L. Silver and David R. Chase are committed to the protection of whistleblowers through the whistleblower claim process and can prosecute your whistleblower claims. If you have questions about your legal rights as a whistleblower, please contact Scott Silver of the Silver Law Group for a free consultation at ssilver@silverlaw.com or toll free at (800) 975-4345.