CBA Record April-May 2018

Representing Businesses— Preliminary Considerations

(Jan. 17, 2017), available at https://www. sec.gov/news/pressrelease/2017-14.html. Businesses are well served to undertake some type of investigation into the alleged misconduct. A common perception is that most whistleblower tips are frivolous. If that is the case, the investigation should not take very long. If, however, a problem really does exist, the company would be well-served to determine its scope and remediate. More- over, the company might obtain benefits from self-reporting. A great example is the Department of Justice’s antitrust cartel leniency program. The program “provides leniency—no criminal fine and no jail time for directors, officers and employees—to the first company that approaches [the DOJ] voluntarily to report violations of [the criminal antitrust laws, such as price fixing, bid rigging or customer allocation.” See Deputy Assistant Attorney General Roger Alford Delivers Remarks at International Conference on the Rule of Law and Anti- Corruption Challenges (October 3, 2017), available at https://www.justice.gov/opa/ speech/deputy-assistant-attorney-general- roger-alford-delivers-remarks-university- notre-dame-and. The lesson from such corporate leniency programs is that whistleblower allegations should be taken seriously and investigated promptly. The manner and method of conducting an internal investigation is also beyond the scope of this article. Briefly, however, attorneys representing the company in an internal investigation are well-served to remember that they represent only the company, and not individuals whom they interview. Counsel’s representation of the company alone should be announced when interviewing personnel—including the whistleblower—for a multitude of reasons. For one, the whistleblower has theoretical interests (the potential for receiving a whis- tleblower award, amnesty or leniency from a regulator in exchange for cooperation) that conflict with the interests of the company. Also, the company itself may want to pro- vide information obtained in the interview to regulators to receive consideration for leniency, but may be hamstrung if inter- viewing counsel leads the witness to believe that he or she is representing the witness.

six years of the retaliation), but did not qualify as a whistleblower under Dodd- Frank, having not reported to the SEC, and therefore lost out on the retaliation claims. The mechanics of reporting can involve specific steps. For example, under the SEC and CFTC rules, a whistleblower tip must be received on what is known as a “Form TCR”—“TCR” stands for “Tip, Complaint or Referral." It must be signed by the whistle- blower under penalty of perjury and therefore needs to be carefully vetted. To be seriously considered, the whistleblower’s tip should be thorough and precise. Most regulators have limited resources. They need help, and they are not helped with obscure or vague allega- tions concerning potential misconduct. The initial intake form is just the first step in the process. To maximize the recovery of whistleblower bounties, such as those awarded in the SEC and CFTC’s programs, the whistleblower (or her counsel) should continue to provide information and evidence. Such material may include in-person interviews, docu- ments and follow-up analysis of informa- tion obtained by the regulator. Many whistleblower programs permit anonymous reporting. Anonymity is important for employees who fear retali- ation or reputational harm. An anony- mous reporter interacts with the regulator through counsel. It is therefore imperative that counsel thoroughly understand the facts, industry and laws at issue. As noted above, if the regulator is suc- cessful in obtaining a judgment or settle- ment from the company, the whistleblower may be eligible for an award. It is up to the whistleblower’s counsel to advocate for the award and ensure that his or her client gets full credit for providing information that led to the regulator’s success. WHAT’S YOUR OPINION? Send your views to the CBA Record, 321 South Plymouth Court, Chicago, IL 60604, or to Publications Director David Beam at dbeam@ chicagobar.org.Themagazine reserves the right to edit letters prior to publishing.

Suffice it to say, businesses—particularly those operating in regulated industries— are likely to face reporting, at least internal reporting, of alleged misconduct. Counsel- ing businesses that develop programs to encourage internal reporting is an expansive subject beyond the scope of this article. Upon receiving a report, internal or exter- nal, the business confronts several issues. Retaliation is a major concern, and attorneys representing targets of whistle- blower allegations must take care to address conduct that could be perceived as retaliation. Many laws prohibit adverse employment actions following a report of misconduct. These laws, like Sarbanes- Oxley in the securities context, create statu- tory causes of action, even for those who only report internally. Moreover, there is at least a possibility that the whistleblower has also reported externally, which would trigger more expansive protections such as those set forth in Dodd-Frank. In some countries, attempting to unmask an anonymous whistleblower without good cause may be considered foul play. Recently, for example, Barclays’ CEO was censured by the U.K.’s Finan- cial Conduct Authority and Prudential Regulation Authority for attempting to utilize the banks’ internal security division in an effort to identify the individual who sent an anonymous letter to the board that was critical of his hiring a long-time associate. See Patrick Collinson, Barclays CEO Jes Staley Faces Fine over Whistle- blower Incident , The Guardian (April 20, 2018), available at https://www. theguardian.com/business/2018/apr/20/ barclays-ceo-jes-staley-facing-fine-over- whistleblower-incident. Businesses must also ensure that employment, nondisclosure, and severance agreements do not discourage or thwart reporting to regulators. For example, asset manager Blackrock ran into trouble when the SEC learned that the firm put provi- sions in its separation agreements that required exiting employees to waive their ability to obtain whistleblower awards. See BlackRock Charged with RemovingWhistle- blower Incentives in Separation Agreements

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