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Whistleblowers are not who we think they are

Staff writer |
A new report from compliance software firm The Network provides a fresh take on whistleblowers, one that’s contrary to the stereotype we may have in our minds.

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The average whistleblower is an engaged well-performing employee, not a disgruntled ex-employee with an axe to grind, as often portrayed, writes Randi Val Morrison at the Corporate Counsel.net.

The Network says 92% of those employees report internally first, not to a government agency like the Securities and Exchange Commission, because the report says they are motivated by the fact it is “a big enough crime,” not the potential to receive a substantial monetary award.

The SEC has recently released interpretive guidance to clarify its position that an individual doesn’t need to report possible violations of the securities laws to the SEC to be characterized as a “whistleblower” and entitled to Dodd-Frank’s anti-retaliation protections.

However, the courts are still confusing on the issue. The Second Circuit – in a split decision – agreed with the SEC in Berman v. Neo@Ogilvy LLC that a Dodd-Frank whistleblower did not have to make a report directly to the SEC to bring a Dodd-Frank retaliation claim.

However, the U.S. District Court for the Central District of California, in Jennifer Davies v. Broadcom, dismissed a whistleblower retaliation claim, ruling that Dodd-Frank’s anti-retaliation provision only protects whistleblowers who provide information to the SEC.

The Securities and Exchange Commission announced it will make significant changes in how it uses its internal administrative courts, The Wall Street Journal reported late on Thursday.

The moves are in response to unrelenting legal challenges to the process, many of them successful, and constant criticism of the alleged unfairness and inherent bias of the process.

The new approach responds to many of the criticisms of defendants, their lawyers and other legal experts, including a report by The Wall Street Journal that cited data saying the judges almost always decided against defendants in favor of the SEC and were perhaps pressured to do so.

The reforms include giving defendants legal protections that are offered in federal court.


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