CBA Record April-May 2018

to a “company outsider who conducted a detailed analysis” of publicly available data that demonstrated a violation of the SEC’s rules. See SEC Awards Whistleblower More than $700,000 for Detailed Analysis (Jan. 15, 2016), available at https://www.sec. gov/news/pressrelease/2016-10.html. Whistleblower Laws Vary Dramatically There is no one-size-fits-all approach to handling whistleblower issues. Attorneys must be in tune with the particular federal, state or local laws that govern the industry or situation at hand. Whistleblower laws are often industry specific, and they vary dramatically. More than 40 federal statutes alone address whistleblower regimes in a variety of contexts; some address retali- ation, others do not; and some provide monetary incentives, while others do not. See Congressional Research Service, Survey of Federal Whistleblower and Anti- Retaliation Laws (April 22, 2013), available at https://fas.org/sgp/crs/misc/R43045.pdf . In addition, state and local governments have initiatives relating to whistleblowers. These laws vary dramatically in terms of whether they offer rewards to whistleblow- ers, the eligibility requirements for the awards, and the method and manner of reporting. These laws also vary dramatically in terms of whether and to what extent they address retaliation against whistleblowers and the consequences for retaliation. Attorneys representing potential or actual whistleblowers must take great care to ensure that the proper procedures for reporting are followed and the whistleblower is aware of the consequences of reporting. At the outset, counsel should advise the whistleblower of the potential ramifications of reporting, including the individual’s responsibility (if any) for the practices at issue as well as legal ramifications (and benefits) for reporting misconduct. Wrongdoers who report first may be eligible to obtain leniency from regula- tors. For example, when deciding upon sanctions, the CFTC considers a variety of factors, including, under the umbrella of “timing,” whether “the individual was first Representing Whistleblowers— Preliminary Considerations

to report the misconduct,” and whether “the cooperation was provided before he or she had any knowledge of a pending investigation.” See CFTC , Enforcement Advisory: Cooperation Factors in Enforce- ment Division Sanction Recommendations for Individuals (January 19, 2017), avail- able at: https://www.cftc.gov/sites/default/ files/idc/groups/public/@lrenforcementac- tions/documents/legalpleading/enfadviso- rycompanies011917.pdf/. Counsel should also discuss practical issues, such as retaliation and counter- measures. Although retaliation is strictly prohibited in most contexts, the lines are not always clear as to what was retaliation or a poorly-timed, previously-conceived adverse employment action. Counsel should also address monetary incentives, if any. The SEC and CFTC programs, for example, make whistleblow- ers eligible for 10-30% of the regulators’ recovery in a successful prosecution resulting in a recovery of $1 million or more. Not all programs, however, offer rewards for those who step forward to prevent misconduct. There are also critical timing consider- ations. For example, if the whistleblower chooses to report internally first, she may only have a limited time to report to the regulator to qualify for an award or to receive statutory protections from retaliation. The Supreme Court’s recent decision in Digital Realty Trust, Inc. v. Somers , 138 S.Ct. 767 (2018), bears this out. In that case, the plaintiff had reported alleged misconduct internally to his supervisor and was terminated shortly thereafter. The internal report qualified the employee as a whistleblower under the Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley), which defines whistleblowing as internal report- ing. But the internal report did not qualify the employee as a “whistleblower” under Dodd-Frank, which, as the Supreme Court held, is limited to one who reports to the SEC (and does not include one who reports internally alone). Digital Realty Trust , 138 S. Ct. at 778. The plaintiff did not sue for retaliation in time under Sarbanes-Oxley (within 180 days of the retaliation). The plaintiff sought to avail himself of Dodd- Frank’s longer statute of limitations (within

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