Fortune 500 Software Company to Pay $11 Million to Settle False Claims Act Case

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Today, CA Technologies, a Fortune 500 company, has agreed to resolve a False Claims Act Complaint for $11 million.   The crux of the Complaint, alleges that CA Technologies  knowingly double billed its government clients for software renewals on contracts from 2001 through 2009.

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The case was filed in 2006, by a courageous whistleblower, Ann Marie Shaw, a former employee at CA Technologies.  According to the unsealed lawsuit, CA Technologies utilized two methods to defraud its government clients. In an effort to double bill, the company targeted its clients with expiring maintenance plans on its software products.  The company would then solicit maintenance renewals from such clients.  However, as alleged by Ms. Shaw, unbeknownst to the clients, when they did renew, in lieu of starting the renewal date at the expiration of the clients’ existing plans, CA Technologies set the renewal period to commence on the day it received the order.  As a direct result of this pervasive scheme, the government was double billed for two maintenance plans until the expiration of the original plan.

In addition to double billing, the Complaint further alleges that the company breached a contract with the Department of Defense that provided for prepaid software.  Unbeknownst to the government, the company diverted any requests for the prepaid software to third-party vendors, thus again causing the government to incur additional and unnecessary expenses.

Contrary to the beliefs of many, blowing the whistle on your employer is never an easy decision to make. It often involves risking one’s livelihood to stand up for what is right.  Understanding the same, I applaud Ms. Shaw for her efforts leading to the settlement of this matter.  As a U.S. citizen, she deserves my gratitude.

Young Law Group is a nationwide leader in whistleblower representation and has successfully represented individuals in countless qui tam cases for over a decade.  Young Law Group attorneys represented whistleblowers in two of the largest False Claims Act settlements in history.  Our firm takes every inquiry seriously and considers confidentiality a top priority.    For a free confidential consultation, please call Eric L. Young, Esquire at 1-800-590-4116 or email to eyoung@young-lawgroup.com.

 

PA FALSE CLAIMS ACT PROPONENT LOOKS TO J&J SETTLEMENT FOR SUPPORT

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The Commonwealth of Pennsylvania is one of just twenty-one states that have yet to enact a version of the False Claims Act (“FCA”), arguably the federal government’s most effective fraud fighting tool.  Currently, twenty-nine states, the District of Columbia, and a number of the nation’s largest cities have enacted some adaptation of the landmark legislation.  Thankfully, as discussed is a prior post on the YLG blog, over the summer, Pennsylvania State Reps., Brandon P. Neuman and Anthony DeLuca introduced H.B. 1439, which would at long last create an FCA for the Commonwealth.

Reps. Neumann and Deluca are using the recent news of Johnson & Johnson’s (“J&J”) historic fraud settlement, as a catalyst, to grow support for their proposed legislation.  As has been widely reported, on Monday October 4, 2013, the U.S. Department of Justice (“DOJ”) announced that J&J will pay more than $2.2 billion to settle allegations related to misbranding, off-label marketing, and the payment of kickbacks in the promotion of a number of drugs, most notably the antipsychotic drug Risperdal.  The DOJ settlement arises from proceedings which consolidated a number of whistleblower’s cases.  As is often the case in large fraud cases, a number of states will benefit from the settlement agreement, due to the existence of their own versions of the FCA.  A PA False Claims Act would allow the Commonwealth to reap the rewards of victories, such as the J&J settlement.

 

Young Law Group, P.C.

For Reps. Neumann and Deluca, Pennsylvania is currently missing the opportunity to return fraudulently removed monies to its coffers, to the substantial detriment of taxpayers.  As Rep. Neumann stated in June, “Pennsylvanians lose as much as $200 million a year through Medicare and Medicaid fraud and abuse … our Pennsylvania False Claims Act legislation … would go a long way toward deterring this dishonesty.”  Following the Monday DOJ announcement, Rep. Neumann wisely noted that, “[m]ore than half of the states and the District of Columbia have false claims acts … and implementing one in Pennsylvania would provide a new source of revenue while punishing those who steal taxpayer dollars.”

The proposed legislation would allow the filing of a civil suit against individuals or companies defrauding the Pennsylvania government, by either the Attorney General or private qui tam litigants.  Just like the FCA, the law would penalize those submitting false claims to the Commonwealth with treble damages, a powerful fraud deterrent.  Additionally, H.B. 1439 provides for anti-retaliation protections for would-be whistleblowers.

The team at YLG proudly continues to offer our full support to Reps. Neumann and Deluca as they seek redress for the taxpayers of the Commonwealth and to punish fraudsters.

Young Law Group is a nationwide leader in whistleblower representation and has successfully represented numerous clients in some of the nation’s largest qui tam cases for over a decade.  For a free confidential consultation, please call Eric L. Young, Esquire at (800) 590-4116 or complete the online form here.

CA Health System to Pay $46 Million to Resolve Whistleblower Suit

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Sutter Health, a Sacramento, CA-based health system, announced the resolution of a whistleblower lawsuit regarding unbundling and over-billing schemes for anesthesia services provided.  The 2009 lawsuit was brought against Sutter by billing auditor, Rockville Recovery Associates. The commissioner joined suit in 2011. A trial in Sacramento Superior Court was scheduled to commence later this month.

According to California Insurance Commissioner, Dave Jones, “Sutter patients or their insurers received three separate charges relating to anesthesia including a charge by an outside anesthesiologist, a charge for the operating room and a charge under an obscure code…” “Unbundling” is the practice of submitting bills piecemeal or in a fragmented fashion to maximize the reimbursement for various tests or procedures that are required, pursuant to Medicare and Medicaid guidelines, to be billed together and therefore at a reduced cost.  According to the suit, the services billed were allegedly already captured in an operating room charge.

In touting the settlement, Commissioner Jones stated, “this settlement represents a groundbreaking step in opening up hospital billing to public scrutiny.” “The settlement requires Sutter to disclose on its Website every component of its anesthesia billing and what those services cost Sutter. Patients, insurers and the public will now be able to compare Sutter’s costs to what it charges for anesthesia. They will see any mark-ups. I commend Sutter for agreeing to these reforms and this settlement. This new transparency should lead to lower prices and point the way to similar billing reforms for all types of hospital services.”  California’s complete press release may be viewed in its entirety here.

“Unbundling” is a frequently utilized tactic by government health care fraud offenders.  An unbundling scheme simply allows a health care provider, or in this case, a health care system, to fraudulently maximize its reimbursement amount by billing the tests and/or procedures separately rather than properly accounting for the test and/or procedures under the single group billing code.

If you are aware of an unbundling scheme, or believe you are a victim of unbundling, contact Young Law Group for a free confidential consultation.

Young Law Group is a nationwide leader in whistleblower representation and has successfully represented individuals in countless qui tam cases for over a decade.  Young Law Group attorneys represented whistleblowers in two of the largest False Claims Act settlements in history.  Our firm takes every inquiry seriously and considers confidentiality a top priority.    For a free confidential consultation, please call Eric L. Young, Esquire at (215) 367-5151 or email to eyoung@young-lawgroup.com.

GIANT HEDGE FUND PLEADS GUILTY TO INSIDER TRADING

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Facing charges from the U.S. Securities and Exchange Commission (“SEC”), Major hedge fund, SAC Capital Advisors, announced its intent, this week, to plead guilty to allegations that the company profited handsomely from illegal insider trading.  As part of the guilty plea SAC has agreed to pay $1.8 billion, the largest financial penalty ever to result from insider trading claims.  Additionally, the company will no longer operate as an investment adviser or invest third-party funds.  Government officials described the penalties as “steep but fair” and “commensurate with the breadth and duration of the charged criminal conduct.”

The federal government alleges that SAC managers and analysts illegally executed trades, based on inside information, between 1999 and 2010 to the tune of hundreds of millions of dollars.  According to the lead prosecutor, U.S. Attorney for the Southern District of New York, Preet Bharara, the company “trafficked in inside information on a scale without any known precedent in the history of hedge funds.”  The funds managed by SAC were a roughly equal mix of client and employee money.

SAC’s plea will not resolve a pending case, brought by the SEC, against the company’s founder Steven A. Cohen.  According the SEC’s civil suit, Cohen, a billionaire and financial rock star, failed to prevent the insider trading that was so rampant throughout his company.  For his part, Cohen flatly denies the SEC’s allegations.

It is unknown at this time whether a whistleblower’s tip played a role in the SEC’s investigation.  However, if that was indeed the case, that individual or group of individuals may receive up to ten to thirty percent of the government’s total recovery, pursuant to the SEC’s Whistleblower program under Dodd-Frank.

McEldrew Young Purtell Merritt is a law firm representing SEC whistleblowers reporting securities fraud such as insider trading to the U.S. Government.  For a free confidential consultation, please call Eric L. Young, Esquire at (800) 590-4116 or complete ou online form to contact us.

U.S. Recovered Over $2 Billion from Health Care Fraud in 2012 Alone

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The premier whistleblower advocacy group, Taxpayers Against Fraud (“TAF”), recently released a report detailing that Whistleblower lawsuits brought under the qui tam provisions of the False Claims Act have generated over $3 billion in settlements and judgments in civil cases in 2012 alone. Cases involving pharmaceutical and medical device sales and marketing fraud comprised the largest portion of these recoveries or approximately $2 billion. The TAF report concluded that every dollar invested by the U.S. government to investigate and prosecute health care fraud generates about $16.4 dollars. The report further details that between 2008 and 2012, the U.S. government expended approximately $575 million in cases that recovered approximately $10 Billion.

As noted in the TAF report, the U.S. Department of Justice has embraced cases being brought under the qui tam provisions of the False Claims Act and, in fact, in 2009 created the Health Care Fraud Prevention and Enforcement Action Team (HEAT) which is aimed at enabling closer collaboration between the Department of Justice and the U.S. Department of Health and Human Services. The TAF report emphasized some recent significant recoveries in the pharmaceutical industry under the False Claims Act including cases involving GlaxoSmithKline, Merck, and other Pharma heavyweights.

GSK paid approximately $1.5 Billion to resolve False Claims Act cases involving a number of drugs marketed and sold for uses not approved by the FDA, payment of kick-backs to prescribers, and other false and misleading statements about drug safety and efficacy. Likewise, Merck paid over $300 million for false and misleading claims about some of its drugs.

As noted in the TAF report, the positive impact that False Claims Act qui tam cases have for U.S. taxpayers cannot be fully accounted for. The reported settlement amounts do not include the amount of money saved by government health care programs due to the deterrent effect of False Claims Act cases. These major settlements undoubtedly cause some pharmaceutical companies and others in the healthcare arena to think twice before engaging in widespread sales and marketing fraud at the expense of federal and state health care programs. At the end of the day, whistleblower programs such as those provided for under the qui tam provisions of the False Claims Act are a critical component to our healthcare system self-correcting such  that wide spread fraud and other misconduct can be ferreted out.

Young Law Group is a nationwide leader in whistleblower representation and has successfully represented numerous clients in some of the nation’s largest qui tam cases for over a decade.  For a free confidential consultation, please call Eric L. Young, Esquire at (800) 590-4116 or complete the online form here.

NEW YORK FALSE CLAIMS ACT TAKES THE LEAD IN THE FIGHT AGAINST FRAUD

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New York is once again pushing the envelope with proposed amendments to the New York False Claims Act, N.Y. Fin. Law §§ 187 – 194 (“NYFCA”).  Twenty-nine states, the District of Columbia, and a number of large U.S. cities have enacted their own False Claims Acts that substantially mirror the federal False Claims Act, 31 U.S.C. § 3729, et seq. (“FCA”).  However, no state or local law, nor the FCA, is as comprehensive as the NYFCA.

In 2010, New York amended the NYFCA, bringing claims of tax fraud within the purview of the law.  Upon doing so, New York became the first, and to date the only, jurisdiction to include such a provision within its False Claims Act.  By contrast, the FCA specifically discounts tax fraud, leaving such claims to the, arguably less effective, IRS Whistleblower program.  New York Attorney General Eric Schneiderman, championed the amendment during his time as a New York State Senator.

Likely due in large part to its success prosecuting cases under the expanded NYFCA, a number of New York State Senators are looking to again widen the scope of the law to further hone its efficacy as a fraud fighting tool.  Senate Bill S4362, the proposed expansion to the NYFCA, would cover whistleblowers who provide information about violations of New York’s banking, insurance, and financial services laws to the New York State Department of Financial Services (“DFS”).  In the event of a successful DFS action, the whistleblower will be entitled to receive up to thirty-percent of the total recovery as a reward for their assistance.  Additionally, the proposed amendments offer the same protections from retaliatory employment actions, currently enjoyed by NYFCA whistleblowers.  Looking to again champion the strengthening of the NYFCA, on October 23, 2013, Mr. Schneiderman’s office submitted proposed regulations related to the expansion.

Young Law Group, P.C.

Young Law Group is a nationwide leader in whistleblower representation and has successfully represented numerous clients in some of the nation’s largest qui tam cases for over a decade.  For a free confidential consultation, please call Eric L. Young, Esquire at (800) 590-4116 or complete the online form here.

LAYOFFS FROM BIG-PHARMA – DO YOUR PART TO HELP FIGHT PHARMACEUTICAL FRAUD

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Pharmaceutical Layoffs

Unfortunately, many pharmaceutical companies place the pursuit of profits above compliance with the law and the well-being of innocent patients, who place their trust in their products.  In order to bolster their bottom line, some Pharma companies engage in fraudulent sales and marketing schemes at the expense of taxpayers through artificially inflated payments made by government healthcare programs.  Fortunately, you can help to fight back.

Have you witnessed or heard of questionable behavior on the job?  Have you been instructed to engage in conduct you know to be improper, or to ignore the improper conduct of others?  Big Pharma has paid out over $30 Billion in recent years in qui tam/False Claims Act settlements resulting from illegal sales and marketing practices.  These include, marketing drugs for off-label uses, paying kick-backs and bribes to health-care providers, manipulating and misrepresenting data related to the efficacy of products and potential adverse effects, and a host of similar improper activity.

For instance, in 2012, facing allegations of off-label marketing and kick-backs for the sale of  Paxil, Wellbutrin, Advair, Lamictal, Zofran, Imitrex, Lotronex, Flovent, Valtrex, and Avandia, Pharma giant GlaxoSmithKline agreed to a massive $3 Billion settlement with the U.S. government, as well as, several states and cities.  The multi-billion dollar settlement was the largest in U.S. history for Pharma fraud.  Similarly, in September 2009, Pfizer agreed to pay over $2 Billion to settle multiple whistleblower lawsuits claiming the company illegally marketed four of its drugs. Federal and State governments are serious about combating healthcare fraud.  The False Claims Act is a valuable tool, which allows whistleblowers to assist in holding fraudsters accountable, by filing qui tam lawsuits on behalf of the government.  Recognizing the immeasurable benefit of whistleblowers in the fight against fraud, the False Claims Act incentivizes knowledgeable individuals to come forward.

Nonetheless, deciding to become a whistleblower is not easy.  In our experience, many times it takes an adverse employment situation such as a layoff to prompt a whistleblower to take action.  If you find yourself in that situation and believe that you have information that the government may be interested in, you should contact an experienced whistleblower attorney immediately to protect your legal rights.

Young Law Group is a nationwide leader in whistleblower representation and has successfully represented individuals in countless qui tam cases for over a decade.  Young Law Group attorneys represented whistleblowers in two of the largest False Claims Act settlements in history.  Our firm takes every inquiry seriously and considers confidentiality a top priority.    For a free confidential consultation, please call Eric L. Young, Esquire at (215) 367-5151 or email to eyoung@young-lawgroup.com.

 

U.S. Chamber of Commerce Looks to Gut The False Claims Act

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In a move that is anything but surprising, the nation’s largest and most powerful business lobby, the U.S. Chamber of Commerce (the “Chamber”) issued a report on October 23, 2013 seeking to undermine the efficacy of the False Claims Act (“FCA”).  The Chamber’s Institute for Legal Reform (“ILR”) composed the study and promised to launch an extensive campaign to reform the FCA.  Given the massive campaign finance apparatus of the Chamber, this is a serious threat to whistleblowers and whistleblower advocates.  The ILR is an unfortunately effective shill for corporate interests and longtime foe of plaintiff’s attorneys, aggressively advocating for strict “tort reform” measures.

Now the Chamber and the ILR have set their well-funded cross-hairs on the FCA, arguably the most effective tool in the government’s arsenal for fighting fraud.  The report, which appears divorced from reality, argues that the government’s ability to bully and threaten companies with treble-damages wrongfully forces them into “oversized settlements,” while simultaneously noting that the roughly $35 billion recovered under the FCA since 1987, represents only a fraction of the fraud perpetrated against the government, each year.  Accordingly, the study states that “[d]espite some successes, the FCA is simply ineffective at preventing fraud as it is currently structured and enforced.”  Not to worry, the Chamber and the ILR have come up with a “solution” to remedy this “problem.”

In predictable fashion, the Chamber and ILR, firmly believe the most effective way to prevent fraud, is not the FCA, which allows qui tam litigants with inside information to prosecute on behalf of all U.S. taxpayers, but rigorous corporate compliance.  The nation’s largest business lobby would prefer the proverbial fox stand guard over the henhouse.  In keeping with the fantastical notion that corporations can always effectively self-regulate, the Chamber and ILR would require whistleblowers to bring their concerns internally at least 180 days prior to filing a qui tam suit.

This proposal from the Chamber and ILR will be nothing short of disastrous, should it gain any traction in Congress.  Whistleblower advocates must join in unanimous condemnation of the Chamber’s obvious attempt to further insulate would be fraudsters from accountability.

Young Law Group is a nationwide leader in whistleblower representation and has successfully represented numerous clients in some of the nation’s largest qui tam cases for over a decade.  For a free confidential consultation, please call Eric L. Young, Esquire at (800) 590-4116 or complete the online form here.

 

U.S. Department of Justice Scores Major Win Against Mortgage Fraud

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This week the U.S. Department of Justice (“DOJ”) announced a significant victory in the fight against mortgage fraud.  A federal jury in the Southern District of New York found Bank of America Corp. (“BofA”) and former Countrywide executive, Rebecca Mairone, liable for civil fraud after a lengthy trial focusing on the companies’ actions leading up to the financial crisis of 2008.  BofA acquired Countrywide and assumed its liabilities just months before the financial collapse, from which the nation is still reeling.  While U.S. District Court Judge Jed Rakoff will determine the ultimate penalty, the DOJ is seeking $848.2 million from the financial giant.

The suit, U.S. ex rel. O’Donnell v. Bank of America Corp, originated with a whistleblower, former Countrywide executive Edward O’Donnell, who provided inside information into the firm’s fraudulent home loan practices and surely proved invaluable to the case.  The case surrounds a Countrywide program, known as the “High Speed Swim Lane,” or tellingly “Hustle” for short.  Under “Hustle” Countrywide originated millions of dollars in shoddy home mortgages, which were subsequently sold to government operated Fannie Mae and Freddie Mac.  At the time, Countrywide eliminated the substantive vetting of loan recipients, while simultaneously paying lucrative bonuses to employees to incentivize volume, a proverbial recipe for disaster.  Not surprisingly, about forty-three percent of the loans issued under “Hustle” had material defects.  After the economy collapsed, precipitating the federal government takeover of Fannie and Freddie, American taxpayers were left holding the bag.

To prosecute the case, DOJ utilized the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (“FIRREA”), an often overlooked weapon in its arsenal.  Among other provisions, FIRREA outlaws fraud against a federally insured financial institution.  Similar to other federal laws that fight fraud, FIRREA has a whistleblower provision through which knowledgably insiders are entitled to a percentage of the government’s recovery.

In a rare move for a bank facing legitimate fraud allegations, BofA opted not to settle out of court, but defend the case at trial with a highly paid team of corporate defense lawyers.  One must wonder whether it now regrets that decision, given an increasing climate of public hostility towards risky lending and investing practices.  Seemingly indicating the DOJ’s unwillingness to balk at the prospect of facing off against financial giants in court, U.S. Attorney Preet Bharara in the Southern District of New York recently stated, “[t]his office will never hesitate to go to trial to expose fraudulent corporate conduct and to hold companies accountable, particularly when it has caused such harm to the public.”

Young Law Group is a nationwide leader in whistleblower representation and has successfully represented numerous clients in some of the nation’s largest qui tam cases for over a decade.  For a free confidential consultation, please call Eric L. Young, Esquire at (800) 590-4116 or complete the online form here.

U.S. District Court for the District of Massachusetts Refuses to Adopt Narrow Definition of SEC Whistleblower Under Dodd-Frank

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On October 16, 2013, a federal court in Massachusetts issued a ruling widely applauded by whistleblower attorneys and advocates.  See Ellington v. Giacoumakis, No. 13-11791-RGS, 2013 WL 5631046 (D. Mass. Oct. 16, 2013).  The primary issue in the decision is the applicability of Dodd-Frank’s anti-retaliation provisions to whistleblowers that experience retaliatory action, prior to bringing their concerns to the Securities and Exchange Commission (“SEC”).  As explained below, this issue is of grave concern to the whistleblower community and has been litigated to differing results throughout the country.

In denying the defendants’ motion for judgment on the pleadings, the court in Ellington addressed the specific issue of whether the plaintiff qualified for the whistleblower protections of Dodd-Frank, in light of the fact that he brought his concerns to the SEC only after his termination.  In Ellington the defendants terminated the plaintiff’s employment after he reported his concerns regarding defendants’ securities violations internally to the company’s compliance officer.  After his firing, the plaintiff subsequently reported to the SEC.  The defendants moved for dismissal arguing that the plaintiff did not qualify as a “whistleblower” as defined by Dodd-Frank and, hence, was not entitled to its protections.

The defendants premised their arguments on Asadi v. G.E. Energy (USA) LLC, a July decision by the Fifth Circuit Court of Appeals which is highly problematic for SEC whistleblowers.  720 F.3d 620 (5th Cir. 2013).  In rendering its decision, on analogous facts, the Fifth Circuit held that congressional intent was clear, in enacting Dodd-Frank, that SEC whistleblowers were limited by statutory definition to individuals who brought their information to the SEC.  The theory is premised on the definitions section of the statute which states, “[t]he term ‘whistleblower’ means any individual who provides… information relating to a violation of the securities laws to the Commission.”  15 U.S.C. § 78u-6(a)(6).  The Asadi ruling was certainly ground-breaking, albeit in an alarming manner.

Prior to the Asadi decision, several federal courts, ruling on the same issue, found that competing statutory language and congressional intent required the term “whistleblower” be construed more liberally for purposes of Dodd-Frank.  See Egan v. Tradingscreen, Inc., No. 10-8202, 2011 WL 1672066, at *4 (S.D.N.Y. May 4, 2011); Kramer v. Trans-Lux Corp., No. 11-1424, 2012 WL 4444820, *4 (D. Conn. Sept. 25, 2012); Genberg v. Porter, No. 11-02434, 2013 WL 1222056, *10 (D. Colo. Mar. 25, 2013); Murray v. UBS Securities, LLC, No. 12-5914, 2013 WL 2190084, at *6-7 (S.D.N.Y. May 21, 2013); see also Nollner v. S. Baptist Convention, Inc., 852 F. Supp. 2d 986 (M.D. Tenn. 2012).  These courts determined, contrary to the Asadi ruling, that reporting to the SEC is not a prerequisite for protection under Dodd-Frank’s anti-retaliation provisions.  However, two days after the Fifth Circuit rendered its decision in Asadi, a federal court in Colorado followed suit and adopted its reasoning, demonstrating an alarming development in the law.  Wagner v. Bank of America Corp., No. 12-00381, 2013 WL 3786643 (D. Colo. July 19, 2013).

Ellington is a critical case, as it is the first district court, post-Asadi, to rule on this issue in a manner favorable to whistleblowers.  Moreover, it signals the willingness of federal courts, outside the Fifth Circuit, to refuse to adopt the dangerous precedent set by Asadi.  To some, it seems this issue is destined for Supreme Court adjudication.  But until that time, at least outside of the Fifth Circuit, it seems securities whistleblowers can avail themselves upon the anti-retaliation provisions of Dodd-Frank, regardless of whether their concerns reach the SEC prior to experiencing retaliatory action.

Young Law Group is a nationwide leader in whistleblower representation and has successfully represented numerous clients in some of the nation’s largest qui tam cases for over a decade.  For a free confidential consultation with one of our SEC whistleblower lawyers, please call Eric L. Young, Esquire at (800) 590-4116 or complete the online form here.

 

 

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