Tuesday, June 16, 2020

Are SEC Whistleblowers Really Safe Anymore?

Some federal courts have ruled that Whistleblowers are not protected from retaliation if they only make an internal report to their employer, rather than one to the SEC.  And a state district court recently ruled that a post-employment whistleblower’s submission to the SEC is subject to civil discovery even though there was no whistleblower retaliation claim pending. 

Contrary to the CFR and case law, the state court explicitly stated the whistleblower’s submission as a former employee is “too late” for whistleblower protections.  This, of course, actually encourages every employer to sue their former employees to gain knowledge and access to confidential submissions, even when the former employee isn’t claiming a retaliation discharge (because the employer didn’t even know about the submission prior to termination.)[1] The problem with this logic is that any such retaliation claim must be brought in federal court.  Moreover, federal regulations prohibit any type of harassment of or interference with even a former employee whistleblower.  If having to share every confidential tip and follow-up communication with the SEC with the subject of the tip isn’t interference, what is?  Food for thought.

[1] Let the fishing expeditions begin!  

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