Last week, the U.S. Securities and Exchange Commission’s Office of the Whistleblower, created in 2011 pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, released its mandated report to Congress on operations for Fiscal Year 2014, ending on September 30, 2014. A number of interesting facts, statistics and developments were reported.
Financial Services
Penalties Rise for ADA Noncompliance
Posted in Financial Services
Noncompliance with the Americans with Disabilities Act just became costlier. Pursuant to an inflation-adjustment formula, on March 28, 2014 the Department of Justice (“DOJ”) issued a final rule raising the civil monetary penalties assessed or enforced by the Civil Rights Division, including those assessed under Title III of the ADA (“Title…
Top 5 Issues for Financial Services Employers in 2014
By John F. Fullerton III on
Posted in Financial Services
My colleague Jason Kaufman and I put together “Five Hot Topics for Financial Services Industry Employers” in this month’s Take 5 newsletter. Below is an excerpt:
The economy may be improving, but challenges remain for employers in the financial services industry. From ever-increasing whistleblower claims to new diversity and inclusion regulations and recent…
Whistleblower Risks – It May Be Time to Reexamine Assumptions about their Management and Insurability
By Allen B. Roberts on
Posted in Financial Services
By Allen B. Roberts and Stuart M. Gerson
Those concerned with managing or insuring risk are affected increasingly by the evolution of whistleblowing, especially as new laws and interpretations since 2009 have changed the stakes by redefining whistleblower protections and bounty award entitlements.
Virtually any risk management program written prior to the 2008 elections may need…
Federal Court Finds SOX Whistleblower Provisions Cover Employees of Private Firms Acting Under Contract to Public Mutual Funds
By Allen B. Roberts on
Posted in Financial Services
By Allen B. Roberts, Douglas Weiner
The U.S. District Court for the District of Massachusetts held in Lawson v. FMR LLC (pdf) that SOX coverage can apply not only to employees of publicly traded companies, but to employees of private management services firms as well.
The typical business model in the financial services industry is that public mutual fund companies generally have no employees of their own, but are managed by private investment advisors. The public company’s investment assets are thus managed by employees of a private employer.
Plaintiffs, employees of a private investment advisor to a public mutual fund, alleged they had engaged in activity protected by SOX, for which they suffered retaliation. The employer moved to dismiss the lawsuit, arguing plaintiffs were not covered by the Section 806 whistleblower protections because they were not employees of a publicly traded company. The defendants noted the very title of the whistleblower section of SOX is “Protection for Employees of Publicly Traded Companies Who Provide Evidence of Fraud.” The plaintiffs countered that Congress intended to extend coverage to private employees in cases such as the plaintiffs.
The Lawson court, the first federal court to decide the issue, agreed with the putative whistleblowers and held that SOX covers employees of private firms providing contract services to the public company.