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Proskauer Whistleblower Defense

SDNY: Directors Not Liable For Whistleblower Claims Under SOX

By Steven J. Pearlman, Pinchos Goldberg & Scott Tan

January 15, 2020

On December 9, 2019, the U.S. District Court for the Southern District of New York ruled that, as a matter of law, directors cannot be held liable under the anti-retaliation provisions of the Sarbanes-Oxley Act. Zornoza v. Terraform Global Inc., No. 18-cv-11617. Background Plaintiff is the former President and CEO of the defendant companies which were owned and controlled by a third company (“Owner”) for the purpose of purchasing and operating its energy…

Proskauer Whistleblower Defense

CFTC Releases FY 2019 Annual Report

By Lloyd B. Chinn, Pinchos Goldberg & Scott Tan

December 20, 2019

The Commodity Futures Trading Commission (“CFTC”) recently released its statutorily mandated 2019 Annual Report covering the fiscal year ending on September 30, 2019. The report, prepared by the CFTC’s Whistleblower Office (“WBO”), outlines the tips received and awards granted during the fiscal year, and describes the status of the WBO’s initiatives to educate consumers about its whistleblower program. Under the program, whistleblowers who voluntarily provide original information about violations of the Commodity Exchange Act are…

Proskauer Whistleblower Defense

NLRB Permits Confidentiality Restrictions During Internal Investigations

By Lloyd B. Chinn & Pinchos Goldberg

December 19, 2019

As reported in Proskauer’s Labor Relations Update blog, the NLRB issued an important opinion on December 17, 2019 relating to employer rules requiring confidentiality from employees during workplace investigations. Apogee Retail LLC d/b/a Unique Thrift Store, 368 NLRB No. 144 (2019). The Board held, in a reversal of the Obama-era Board, that employers may require strict confidentiality for the duration of workplace investigations into illegal or unethical behavior. At first blush, a requirement of…

Proskauer Whistleblower Defense

ARB: “Hinting” at Filing a Whistleblower Complaint is Not Protected Activity

By Steven J. Pearlman, Pinchos Goldberg & Abigail Rosenblum

December 5, 2019

On October 31, 2019, the ARB held that an employee who merely “hints” that he or she intends to file a whistleblower complaint has not engaged in protected activity sufficient to invoke the whistleblower protection provision in SOX. Hoptman v. Health Net of California, ARB Case No. 2017-0052, (Oct. 31, 2019). Background Complainant was a claims representative for the Company, a health maintenance organization. Complainant alleged that he discovered systemic overpayments to the Company…

Proskauer Whistleblower Defense

SEC Releases FY 2019 Whistleblower Program Annual Report

By Steven J. Pearlman & Jacob L. Hirsch

November 25, 2019

On November 15, 2019, the SEC published its annual report to Congress covering the agency’s whistleblower program. The report, which covers the period of October 1, 2018 through September 30, 2019, was prepared by the SEC’s Office of the Whistleblower (“OWB”) to summarize its whistleblower bounty program, report on recent statistical trends, and revisit key amendments to the SEC’s Dodd-Frank regulations that were first introduced in June 2018. Whistleblower Bounty Program The statistics provided in…

Proskauer Whistleblower Defense

SEC Files Suit Against Company For Allegedly Impeding Investors From Blowing the Whistle

By Steven J. Pearlman & Lexie Reynolds

November 13, 2019

On November 4, 2019, the SEC announced that it had filed an amended complaint against online auction portal Collectors Café and CEO Mykalai Kontilai, alleging Kontilai tried to prevent investors from communicating with the SEC in violation of Rule 21F-17. The SEC previously charged Collectors Café and Kontilai with fraudulently raising $23 million by making false statements to investors and instead misappropriating more than $6.1 million. In the amended complaint, the SEC alleged that Collectors…

Proskauer Whistleblower Defense

ARB: SOX Whistleblower Provision Does Not Apply Extraterritorially

By Harris Mufson & Allison Martin

October 30, 2019

In a pair of recently issued decisions, the Department of Labor’s Administrative Review Board (ARB) held that Sarbanes Oxley’s anti-retaliation provision does not apply extraterritorially. Hu v. PTC, Inc., ARB Case No. 2017-0068 (Sept. 18, 2019); Perez v. Citigroup, Inc., ARB Case No. 2017-0031 (Sept. 30, 2019). Hu Decision In Hu, the complainant worked entirely in China for a foreign subsidiary of a U.S. company. He claimed that his employment was terminated in…

Proskauer Whistleblower Defense

U.S. Senate Introduces Bill to Extend Dodd-Frank Whistleblower Protections

By Harris Mufson, Pinchos Goldberg & Tony S. Martinez

October 29, 2019

On September 25, 2019, a bipartisan group of U.S. Senators introduced the Whistleblower Programs Improvement Act (the “Act”), which would extend anti-retaliation protections under the Dodd-Frank Act to internal complaints. The Act mirrors a bill introduced in the House of Representatives earlier this year in direct response to the U.S. Supreme Court’s holding in Digital Realty Trust, Inc. v. Somers, 138 S. Ct. 767 (2018), in which the Court unanimously held that Dodd-Frank’s anti-retaliation…

Proskauer Whistleblower Defense

Second Circuit Holds Dodd-Frank Whistleblower Retaliation Claims are Arbitrable

By Lloyd B. Chinn & Pinchos Goldberg

October 28, 2019

On September 19, 2019, the Second Circuit affirmed a New York District Court’s order compelling arbitration of a whistleblower retaliation claim under the Dodd-Frank Act. Daly v. Citigroup Inc., et al., No. 18-665. Background Plaintiff worked in the Private Bank Division of the bank. She allegedly complained to bank attorneys and human resources employees that her supervisor repeatedly demanded that she disclose material non-public information so that he could pass that information along to…

Proskauer Whistleblower Defense

SDNY Grants Motion to Dismiss SOX Retaliation Claim

By Steven J. Pearlman & Jacob L. Hirsch

October 21, 2019

On September 18, 2019, the U.S. District Court for the Southern District of New York granted a defendant-employer’s motion to dismiss a SOX whistleblower retaliation claim, finding that the plaintiff failed to adequately plead protected activity. Tonra v. Kadmon Holdings, Inc., No. 18-cv-9028. Background The defendant-employer is a publicly traded biopharmaceutical company that develops and produces several drugs. Around August 2011, Plaintiff was hired as the company’s Vice President of Preclinical Pharmacology. About…

Proskauer Whistleblower Defense

Blog Authors

SDNY: Directors Not Liable For Whistleblower Claims Under SOX

CFTC Releases FY 2019 Annual Report

NLRB Permits Confidentiality Restrictions During Internal Investigations

ARB: “Hinting” at Filing a Whistleblower Complaint is Not Protected Activity

SEC Releases FY 2019 Whistleblower Program Annual Report

SEC Files Suit Against Company For Allegedly Impeding Investors From Blowing the Whistle

ARB: SOX Whistleblower Provision Does Not Apply Extraterritorially

U.S. Senate Introduces Bill to Extend Dodd-Frank Whistleblower Protections

Second Circuit Holds Dodd-Frank Whistleblower Retaliation Claims are Arbitrable

SDNY Grants Motion to Dismiss SOX Retaliation Claim

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