SEC, CFTC Directors Speak on Whistleblower Programs

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The Chief of the SEC’s Office of the Whistleblower, Jane Norberg, and the Director of the CFTC Whistleblower Office, Christopher Ehrman, spoke recently at the Practicing Law Institute’s program on June 28, 2017, titled Corporate Whistleblowing in 2017. Their comments covered a wide range of hot topics in the field of whistleblower law and were relayed in a recent JDSupra article, so we thought them appropriate to briefly detail here for current and potential Dodd-Frank whistleblowers.

Supreme Court to Review SEC Internal Whistleblower Retaliation Protections

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The Supreme Court will next term review a whistleblower retaliation lawsuit, Somers v. Digital Realty Trust, Inc., to determine whether the anti-retaliation protections of the Dodd-Frank Act protects employees who report misconduct internally. The Ninth Circuit, in a split decision, determined that the Dodd-Frank Act protected the employee from retaliation as a whistleblower in spite of the fact that he did not file a Form TCR with the U.S. Securities and Exchange Commission.

No to CHOICE Act on SEC whistleblower culpability

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The U.S. House of Representatives on Thursday approved banking reforms in the Financial CHOICE Act of 2017 that would, if adopted, “gut many of the key banking reforms implemented after the financial crisis” according to a CNBC article. Apart from the overall impact on the Dodd-Frank Act, the law makes an important change to the SEC whistleblower program which would impact employees reporting violations of the federal securities laws.

SEC Warns About Fake News on Stocks

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Last month, the SEC warned investors about companies using fake news to drive up stock prices. In conjunction with this warning, the SEC charged 27 public companies, firms and writers with fraud for failing to disclose paid promotion, using multiple pseudonyms for publications about the same stock and/or using fake credentials. Just over half (17) reached settlements of up to $3 million.

Tax Day Debate at Supreme Court Over Time for SEC Disgorgement

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The Securities and Exchange Commission defended its ability to disgorge illegal profits from wrongdoers before the Supreme Court yesterday in Kokesh v. SEC. It was Justice Neil Gorsuch’s second day of oral arguments.  An opinion is expected by the end of the term in July.

9th Circuit: Internal SEC Whistleblowers Can Sue Under Dodd-Frank Anti-Retaliation Provision

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On a 2-1 decision, the Ninth Circuit has affirmed the right of internal whistleblowers to sue under the Dodd-Frank Act after they are retaliated against for informing their company of suspected violations of federal securities laws. The circuit split on anti-retaliation protections for internal SEC whistleblowers now consists of the Second and Ninth Circuits in favor and the Fifth Circuit against.

Review of SEC Rule 21F-17 (Impeding Whistleblowers)

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Brandon Lauria will speak on SEC enforcement of Rule 21F-17 at a Knowledge Group live webcast on March 9, 2017. Rule 21F-17 prohibits confidentiality agreements and other measures which restrict access to the SEC whistleblower program. The one hour webcast at noon (EST) will cover the rule protecting whistleblower communications with the SEC and recent civil enforcement actions brought by the SEC against corporations for impeding communications with whistleblowers.

Hacking and Insider Trading Continue to Mix

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It was more than a year ago that the U.S. Securities and Exchange Commission (SEC) cracked down on a group of hackers and traders who obtained confidential, non-public information about publicly traded companies by hacking websites for press releases. A recently released report by a cybersecurity company suggests that such insider trading continues, although this time with data obtained through phishing from personnel at publicly traded companies who typically file reports to investors with the SEC.

Congress Considers Co-Conspirator Eligibility for SEC Whistleblower Rewards

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A memo circulated in early February regarding the Financial Choice Act produced by House Financial Services Chairman Jeb Hensarling (R-Texas) has proposed the elimination of SEC whistleblower rewards for co-conspirators.

Court Rules on Confidentiality Agreements for SEC Whistleblowers

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A U.S. District Court in the Southern District of California has recently ruled on the validity of a SEC whistleblower’s defense to the enforcement of a company’s confidentiality agreement. In the decision, the Court accepts the validity of a public policy defense to a limited whistleblower disclosure of confidential information concerning securities fraud.

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