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Articles Posted in Whistleblower protection

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On June 17, 2024, the U.S. Commodity Futures Trading Commission (the “CFTC”) reached a $55 million settlement with Trafigura Trading LLC, marking a significant aggressive shift in the agency's approach to whistleblower protections.  This case sets a new precedent in the CFTC’s enforcement program and underscores the CFTC's commitment to protecting whistleblowers. In its settlement, the CFTC alleged that Trafigura manipulated oil derivatives prices, exploited confidential information to gain an unfair advantage in gasoline transactions and, most importantly, that Trafigura failed to carve out an exception for whistleblowers in its employment agreement's confidentiality provisions. This marks the first time the CFTC has publicly taken a position on this whistleblower protection issue.  The whistleblower carveout requires non-disclosure provisions to explicitly permit communications with law enforcement or regulators.  The CFTC argues that absent these carveouts, such provisions cause confusion and impede voluntary, direct communications with regulators, like the CFTC, about possible violations.On June 17, 2024, the U.S. Commodity Futures Trading Commission (the “CFTC”) reached a $55 million settlement with Trafigura Trading LLC, marking a significant aggressive shift in the agency’s approach to whistleblower protections. This case sets a new precedent in the CFTC’s enforcement program and underscores the CFTC’s commitment to protecting whistleblowers. Continue reading

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New York-based hedge fund investment and technology development firm D. E. Shaw has settled with the SEC over charges that it violated the rights of current and former employees when it raised “impediments” for them to become whistleblowers. The SEC also fined D. E. Shaw $10M to settle the charges. D. E. Shaw has since updated its documentation to allow employees to contact the SEC and other agencies to report possible misconduct. At issue is the firm’s requirement that employees sign agreements that prohibited the disclosure of sensitive or confidential information to any third party. Without an exception for possible SEC whistleblowers, employees were prevented from contacting the SEC with any damning information they felt necessary. Exiting employees were also required to sign a release indicating that they had not filed any reports with any governmental agency, or risk losing deferred compensation and other financial incentives.New York-based hedge fund investment and technology development firm D. E. Shaw has settled with the SEC over charges that it violated the rights of current and former employees when it raised “impediments” for them to become whistleblowers. The SEC also fined D. E. Shaw $10M to settle the charges. D. E. Shaw has since updated its documentation to allow employees to contact the SEC and other agencies to report possible misconduct. Continue reading

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The SEC settled charges against CRBE, a Dallas-based commercial real estate services and investment firm, for using a clause in their separation agreements that violated the Securities and Exchange Commission’s whistleblower protection rule. Departing employees could receive separation pay only if they signed a release that stated they had not filed any complaints against the firm with the SEC or any other federal agency. This violates the SEC’s whistleblower protection rule for those employees. During 2021 and 2022 nearly 900 former employees had signed this release as part of their separation agreement. Those agreements would impede a former employee from filing a claim. Making it contingent for employees to receive separation pay was an action intended to directly prohibit them from contacting any federal agency regarding the company. This directly violates whistleblower provisions under Exchange Act Rule 21F-17(a).The SEC settled charges against CRBE, a Dallas-based commercial real estate services and investment firm, for using a clause in their separation agreements that violated the Securities and Exchange Commission’s whistleblower protection rule. Departing employees could receive separation pay only if they signed a release that stated they had not filed any complaints against the firm with the SEC or any other federal agency. This violates the SEC’s whistleblower protection rule for those employees. During 2021 and 2022 nearly 900 former employees had signed this release as part of their separation agreement. Continue reading

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Can a company prohibit former employees from speaking to federal regulators, such as the SEC, and function as a whistleblower? They can certainly try, but it is still illegal. Monolith Resources, LLC, based in Nebraska, included language in their employment separation agreements prohibiting departing employees from recovering money through participation in investigations, enforcement actions, or filing claims with the government. This includes participating in the SEC's Whistleblower program. On Friday, September 8, 2023, the privately held tech and energy company agreed to pay a $225,000 penalty for violating the whistleblower protection rules and including this language in their employee separation agreements. According to the SEC, the company included this language for approximately three years.Can a company prohibit former employees from speaking to federal regulators, such as the SEC, and function as a whistleblower? They can certainly try, but it is still illegal.

Monolith Resources, LLC, based in Nebraska, included language in their employment separation agreements prohibiting departing employees from recovering money through participation in investigations, enforcement actions, or filing claims with the government. This includes participating in the SEC’s Whistleblower program. Continue reading

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What should you do if you’ve encountered defense contractor fraud and you want to stop it? Practically speaking, start by getting qualified legal representation as soon as possible. You need legal protection, to understand the best ways to insulate yourself from retaliation or other negative results, and, importantly, to make sure you aren’t somehow held liable for the fraud. (Or, if you already have been involved, what you can do to minimize your liability.) Beyond that, there are other possibilities to consider. Does This Relate To Classified Work? The law does not automatically protect those who reveal classified material as whistleblowers. Therefore, before filing any complaint, consider whether any material relating to your complaint is classified. If so, you’ll need to follow special procedures to qualify for whistleblower protections. File A “Qui Tam” Complaint If you’ve uncovered a defense contractor’s large-scale fraud, consider filing a False Claims Act “qui tam” lawsuit in federal court. When you file the claim, the lawsuit is filed under seal for 60 days. This means that the government has 60 days to review your allegations and decide if they want to prosecute your case. If they do not, you may continue to litigate it on your own. If you prevail, you’re entitled to an award of 30% of the government’s proceeds.   What should you do if you’ve encountered defense contractor fraud and you want to stop it? Practically speaking, start by getting qualified legal representation as soon as possible. You need legal protection, to understand the best ways to insulate yourself from retaliation or other negative results, and, importantly, to make sure you aren’t somehow held liable for the fraud. (Or, if you already have been involved, what you can do to minimize your liability.) Beyond that, there are other possibilities to consider. Continue reading

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Whistleblowers help maintain the integrity and fairness of U.S. financial markets. They are a vital watchdog and play an essential role in the securities markets. The whistleblower process can be vigorous and draining and comes with risk. Once a whistleblower decides to take a moral stand on what is right, they must carefully prepare for the process and possible consequences. A whistleblowing complaint might trigger an employment agreement provision that could jeopardize the job of a whistleblower, even out of retaliation. While laws exist to protect whistleblowers who are wrongfully fired, ensuing lawsuits and getting re-established in the workplace can take their toll. There is also the possibility of getting blackballed because of the whistleblower association. Even if not fired, a whistleblower might suffer fear of termination and reprisal. They might get shunned and emotionally ostracized and find themselves in a hostile working environment. Stress and anxiety are often a natural part of the process.Whistleblowers help maintain the integrity and fairness of U.S. financial markets. They are a vital watchdog and play an essential role in the securities markets.

The whistleblower process can be vigorous and draining and comes with risk. Once a whistleblower decides to take a moral stand on what is right, they must carefully prepare for the process and possible consequences. Continue reading

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It’s axiomatic that whistleblowing only works if people are willing to come forward and tell authorities of companies’ wrongdoing. That’s why Securities and Exchange Commission (SEC) sees retaliation—being punished for having made a report of wrongdoing—as a primary threat to its whistleblowing initiative: If people believe they will be punished for reporting companies’ malfeasance to the SEC, then they’re less likely to come forward. Therefore, the SEC has rules that bar retaliation against whistleblowers after they’ve reported potential securities law violations, and the SEC has been vigorously enforcing them. Under the law, “employers may not discharge, demote, suspend, harass, or in any way discriminate against an employee in the terms and conditions of employment who has reported conduct to the Commission that the employee reasonably believed violated the federal securities laws.”Let me be clear: Retaliation protections are a key component of the whistleblower program, and we will bring charges against companies or individuals who violate the anti-retaliation protections when appropriate.

—Jay Clayton,

Former Chairman, Securities and Exchange Commission Continue reading

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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.”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. Continue reading

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A senior financial analyst at The Walt Disney Company internally reported billions of dollars of alleged financial irregularities and claims that she was harassed and retaliated against for speaking out. In 2017 she filed an SEC whistleblower complaint. Now she is suing Disney. Sandra Kuba, the plaintiff in a lawsuit against Disney, is a certified Public Accountant (CPA) who was hired as a financial analyst for Disney Financial Services in 1999. Her complaint (link to complaint saved in downloads “Sandra Kuba…”) states that “Throughout her employment, Plaintiff worked incredibly hard and consistently received positive performance reviews.” SEC Whistleblower Alleges Disney Overstated Revenue In 2013, Disney promoted Kuba to the position of senior financial analyst. Kuba claims that she became aware that employees in the parks and resorts segment were systematically overstating revenue “by billions of dollars by exploiting weaknesses in the company’s accounting software.” One of the ways Kuba alleges Disney employees did this was by “recording fictitious revenue for complimentary golf rounds or for free guest promotions.” She also alleged that revenue for $500 gift cards was recorded at face value even though guests only paid a discounted rate of $395 for them. Kuba alleges that she reported this wrongdoing to her supervisors but was ignored. In 2017, she emailed her allegations to the president of Walt Disney World Resort, George Kalogridis.A senior financial analyst at The Walt Disney Company internally reported billions of dollars of alleged financial irregularities and claims that she was harassed and retaliated against for speaking out. In 2017 she filed an SEC whistleblower complaint. Now she is suing Disney.

Sandra Kuba, the plaintiff in a lawsuit against Disney, is a certified Public Accountant (CPA) who was hired as a financial analyst for Disney Financial Services in 1999. Her complaint states that “Throughout her employment, Plaintiff worked incredibly hard and consistently received positive performance reviews.” Continue reading

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