As the CC has noted before, the U.S. admires whistleblowers, especially
after the fact. Often, we ignore them and then, after a preventable
horror (the Moody's rating kerfuffle and the Madoff Ponzi scheme being
the latest that come to mind), we laud the formerly ignored
whistleblower and wonder why nobody listened. Hence, after such
horrors, and especially when they coincide with some kind of economic
meltdown (Enron/tech bubble; Madoff/financial crisis), we pass laws
that contain stringent protections for the whistleblowers who come
after those to whom we should have been listening in the first place.
The American Recovery and Investment Act of 2009 (ARRA) is no
exception. It contains a strong whistleblower provision protecting
those employees of companies that receive "covered funds" who complain
about a variety of malfeasance, and it provides employee-friendly
procedures in the event of alleged retaliation. Indeed, the
whistleblowing need only be a "contributing factor" to reprisal. So an
employer can have some good reasons for dumping a whistleblower, but if
the employer knew about the employee's disclosures or there was
temporal proximity between disclosure and reprisal, the employer has to
blow a pretty good tune to prove it would have fired, demoted or done
whatever to the employee anyway. So how can you ensure your clients
never hear that whistle blowing?
New Whistleblower Protections Under the ARRA is Michael Delikat's (Orrick, Herrington & Sutcliffe LLP) PowerPoint blueprint to the subject at hand — a blueprint that accompanied his presentation at the most recent installment of PLI's Stimulus Package Briefing Series, Compliance with Expanded Whistleblower Protections. It lays out ARRA's whistleblower provisions and compares them to those of Sarbanes-Oxley's to give you a good sense of their strength, and as Delikat points out, they are "broader" in a number of respects, so you'll need to be familiar with the differences. You can find the new whistleblower provision in section 1553 of ARRA, and it covers all non-Federal employers who receive covered funds who complain of:
From there, Delikat summarizes the complaint procedure under ARRA and the employee-friendly burdens of proof under ARRA. Delikat also notes that the newfound power of whistleblowers may not stop with ARRA. There is a move afoot to encourage the SEC to expand its whistleblower protections. At the rate the government is going, we may have a whistle symphony soon.
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