19: Whistleblowing

What exactly is a Qui Tam lawsuit?

- Qui tam lawsuits are a type of civil lawsuit whistleblowers bring under the False Claims Act, a law that rewards whistleblowers if their qui tam cases recover funds for the government. -- Allows private citizens to file actions on behalf of the government --- Plaintiff receives 15-30% of recovered funds

What is the False Claims Act?

-- Imposes liability on persons and companies who defraud the government -- Treble damages - includes a qui tam provision that allows people who are not affiliated with the government, called "relators" under the law, to file actions on behalf of the government -- Persons filing under the Act stand to receive a portion (usually about 15-25 percent) of any recovered damages.

What is the Dodd-Frank Act (2011)?

-- is a BOUNTY program -- Individuals voluntarily providing information to the SEC relating to a violation of the securities laws may be eligible for monetary rewards of between 10% and 30% of the monetary sanctions the SEC collects in a subsequent judicial or administrative action, provided the action results in monetary sanctions of $1 million or more.

What are the 3 views of whistleblowing? (regarding loyalty)

1. Standard/Loyalty View (Bok) "Loyalty to colleagues and clients comes to be pitted against loyalty to the public interest, to those who may be injured unless the revelation is made." "A would-be whistleblower must weigh his responsibility to serve the public interest against the responsibility he owes his colleagues and the institution in which he works." --> you owe loyalty to your colleagues and employer ____ 2. No-Loyalty View (Duska) "In any relationship which demands loyalty the relationship works both ways and involves mutual enrichment." -> whistleblowing has nothing to do with loyalty "A company is not a person. A company is an instrument with a specific purpose, the making of profit." -> no loyalty ______ 3. Whistleblowing-as-Loyalty View (Larmer) "Loyalty involves acting in accordance with what one has good reason to believe to be in that person's best interest." -> whistleblowing is a loyal act "An employer who is acting immorally is not acting in her own best interests and an employee is not acting disloyally in blowing the whistle."

What is the Sarbanes-Oxley Act (SOX) (2002)?

Protects employees of publicly traded company from retaliation/discrimination for whistleblowing. Covers Reports to government officials Reports to supervisors Participation in SEC or shareholder legal proceedings Under the applicable case law, protected activity covers a wide range of conduct, including contacts with the news media. Aggressive auditor doing his or her job, even if he or she never filed an allegation of corporate wrongdoing with the SEC. - "Make whole" remedies: includes reinstatement, back pay, attorney fees and costs, and "special remedies"

What were the red flags in the International Drilling Corp. case?

Red Flags: - October meeting about past securities violations - "Cash surrender values may be a bit overstated." - Comingling - Partnership purchases from IDC subsidiaries

internal whistleblowing

report misconduct on a fellow employee or superior within their company.

external whistleblowing

report misconduct to outside persons or entities. law enforcement watchdog agencies other local, state, or federal agencies lawyers the media