SEC Whistleblower Lawyer for Ohio Employees

If you reported corporate fraud at work, you shouldn’t be punished for doing the right thing. Federal law protects whistleblowers who report corporate fraud at public companies, particularly fraud against shareholders. If you have been retaliated against for speaking up, contact an experienced Cleveland SEC whistleblower lawyer for help.

Protecting whistleblowers through Sarbanes-Oxley

SEC whistleblower lawyer in Cleveland
U.S. Securities and Exchange Commission

The first place corporate whistleblowers should look for protection from retaliation is the Sarbanes-Oxley Act of 2002, or “SOX.” Enacted in the wake of the Enron scandal, Congress passed Sarbanes-Oxley to restore trust in the financial markets and provide safeguards for investors in public companies. To help achieve that goal, Congress included a whistleblower provision designed to encourage employees to report corporate fraud.

Contained in Section 806 of SOX, the whistleblower provision protects employees from retaliation for reporting corporate fraud or for participating in an investigation into corporate fraud. See 18 U.S.C. § 1514A. Specifically, it protects employees who report conduct they reasonably believe:

  • constitutes mail fraud, wire fraud, bank fraud, or securities fraud;
  • violates a rule or regulation of the Securities and Exchange Commission; or
  • violates any provision of federal law regarding shareholder fraud.

Section 806 also protects employees who may not be the SEC whistleblower themselves, but who testified in or participated in an ensuing investigation. Though SOX typically applies to public companies, the whistleblower provision also protects employees of private companies that perform work for a public company—for instance investment advisers, law firms, and accounting firms.

Helping SEC whistleblowers avoid pitfalls

A SOX whistleblower retaliation claim requires the employee to follow a somewhat-complex set of administrative procedures. The employee must first file a complaint with the Department of Labor’s Occupational Health and Safety Administration (OSHA). The complaint must be filed within just 180 days of when the employee becomes aware of the retaliation. After OSHA investigates, it will issue a determination. Either the employee or the employer may appeal that decision through a series of administrative hearings. Once the administrative appeals are completed, either the employer or employee can then appeal to the appropriate United States Court of Appeals. An employee must follow this administrative procedure, and cannot file a claim directly in federal court unless the administrative proceedings are not completed within 180 days of when the complaint was filed with OSHA. The best way to avoid losing your day in court is with the help of an experienced SEC whistleblower lawyer.

As with other employment law claims, prevailing on a SOX whistleblower claim requires the employee prove several things:

  • First, the employee must prove he or she engaged in a “protected activity” (for instance, reporting shareholder fraud).
  • Second, the employee must prove the employer knew or believed the employee engaged in protected activity.
  • Third, the employee must prove he or she suffered some negative employment action.
  • Finally, the employee must demonstrate that the circumstances suggest the protected activity was “a contributing factor” in the negative employment action.

If the employee proves all that, the employer can still avoid liability. To do so, it must prove “by clear and convincing evidence” that it would have taken the same action against the employee even without the protected activity. It is important to note, however, that the employee’s report of suspected fraud need not actually turn out to be correct. An SEC whistleblower is protected, so long as the employee reasonably believed that the conduct being reported was a violation of federal law.

If an employee establishes a SOX whistleblower violation, the remedies available are significant. As a general rule, the employee is entitled to “all relief necessary to make the employee whole.” 18 U.S.C. § 1514A(c)(1). That relief typically includes back pay with interest, reinstatement, any special damages the employee can prove, and attorney fees and costs of pursuing the claim.

Dodd-Frank protection for corporate whistleblowers

A newer protection for SEC whistleblowers is the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, 15 U.S.C. § 78u-6(h). Pursuing a claim under Dodd-Frank has several potential advantages over a Sarbanes-Oxley claim:

  • First, unlike a SOX whistleblower claim, a Dodd-Frank retaliation claim can be filed directly in federal court, and does not need to first go through an administrative agency.
  • Second, Dodd-Frank has a longer statute of limitations (three years) than SOX.
  • And third, Dodd-Frank allows for double back pay to prevailing employees as part of the available recovery.

Still, Sarbanes-Oxley arguably protects employees under a wider range of circumstances than Dodd-Frank. So SOX might apply where Dodd-Frank does not.

Ohio SEC whistleblower lawyer

As we saw with the fall of Enron, and again with the great recession a few years later, corporate fraud can cause widespread economic devastation that affects us all. Employees who report corporate and shareholder fraud therefore deserve our gratitude, not retaliation for doing what is right. Although the corporate whistleblower statutes are an important protection, pursuing claims under them can be confusing and difficult. Don’t go it alone.

If you reported shareholder fraud or other types of corporate fraud at a public company and been retaliated against for it, contact an experienced Cleveland SEC whistleblower attorney right away.