Solid guidance for managing whistleblower policies in light of the new Dodd-Frank Act provisions In July 2010, President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act that greatly expanded whistleblower bounties in connection with violations of federal securities laws, including the Foreign Corrupt Practices Act. Discussing business protection strategies and best practices in dealing with whistleblowers, Whistleblowers will appeal to board members, executives, corporate compliance personnel, attorneys for whistleblowers and defense attorneys, as well as potential…mehr
Solid guidance for managing whistleblower policies in light of the new Dodd-Frank Act provisions In July 2010, President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act that greatly expanded whistleblower bounties in connection with violations of federal securities laws, including the Foreign Corrupt Practices Act. Discussing business protection strategies and best practices in dealing with whistleblowers, Whistleblowers will appeal to board members, executives, corporate compliance personnel, attorneys for whistleblowers and defense attorneys, as well as potential employee whistleblowers.
- Case studies of GlaxoSmithKline, Pfizer and other high profile whistleblower incidences
- Examines new Dodd-Frank incentives to whistleblowers
- Recommends best practices for corporations in light of new whistleblowing incentives
- Explores other federal and state statutory incentives to whistleblowing
Timely and comprehensive, Whistleblowers emphasizes the disincentives to whistleblowing, reviewing the academic studies of whistleblowers with the idea of developing best practices in working with whistleblowers.
FREDERICK D. LIPMAN is a partner with the international law firm of Blank Rome LLP and is also the president of the Association of Audit Committee Members, Inc. He has more than fifty years of experience in the areas of corporate governance, mergers and acquisitions, private equity, and IPOs. He has appeared on CNBC, CNN, Bloomberg, and Chinese television as a national commentator on business topics and has been quoted in the Wall Street Journal, the New York Times, USA Today, Forbes, and other business publications.
Inhaltsangabe
Foreword xiii Acknowledgments xv Introduction 1 PART I: THE WHISTLEBLOWERS AND THE DODD-FRANK INCENTIVES Chapter 1: The Dramatic Expansion of Whistleblower Awards under Dodd-Frank 11 Whistleblower Provisions of Dodd-Frank 13 What Is "Original Information"? 14 What Are Violations of the Federal Securities Laws? 15 Rule 10b-5: Market Manipulation 19 Violating the Accounting Standards 20 False Financial Statements by Public Companies 20 Other Securities Laws 22 Protections for Whistleblowers 23 Commodity Exchange Act 23 Notes 25 Chapter 2: The Remarkable Story of Cheryl Eckard and the $96 Million Bounty under the False Claims Act 27 Who Is Cheryl Eckard? 27 Eckard's Post-termination Activities 28 Eckard's Superiors 29 Background Allegations 30 Alleged Violations 31 Timeline of Eckard's Alleged Activities 33 The Lessons of Glaxo 40 Notes 42 Chapter 3: The Pfi zer Whistleblowers Who Collected Over $100 Million under the False Claims Act 45 John Kopchinski 46 Bextra 47 The Complaint 48 Pfizer Lessons 51 Notes 53 PART II: DISINCENTIVES AND FACTORS MOTIVATING PUBLIC DISCLOSURE Chapter 4: Disincentives to Internal Whistleblowers 57 Financial Disincentives 58 Nonfi nancial Disincentives 59 Contractual Commitments and Fiduciary Duties 60 Ethics Resource Center Survey 61 Reinstatement as a Remedy 62 Empirical Study 65 Notes 67 Chapter 5: Women as Whistleblowers: Factors Motivating Public Whistleblowing 69 Sherron Watkins 69 Cynthia Cooper 71 Coleen Rowley 71 External Reporting by Internal Whistleblowers 72 Whistleblower Anonymity 74 Notes 74 PART III: ORGANIZATIONAL BEST PRACTICES Chapter 6: Why Should Organizations Adopt a Robust Whistleblower System? 79 Diminishment of Shareholder Wealth 80 Boards of Directors 81 We Were Duped! 82 Executive Whistleblowers 84 Why Independent Directors Cannot Rely Solely on Independent or Internal Auditors 86 Legal Standard 89 Caremark 90 Recommended Strategy 91 Criminal Liability of an Organization 92 Responsible Corporate Officer Doctrine 93 The Acme Markets Case 94 The U.S. Department of Justice Criminal Guidelines 96 The Disadvantages of a Robust Whistleblower System 97 Notes 98 Chapter 7: Establishing a Robust Whistleblower System 103 Problems with the Current Whistleblower System 104 Initial Steps 107 Elements of a Robust Whistleblower Policy 108 Independent Directors Must Be in Charge 109 The Whistleblower Program Must Be Independently Administered 111 Whistleblower Complaints Should be Investigated by Independent Counsel Reporting Directly to the Independent Directors 113 There Should Be No Presumption that Anonymous Complaints Are Less Deserving of Investigation 117 Motivations and Personality of the Whistleblower Are Not Relevant to the Truth of the Allegations 118 Absolute Protection of Whistleblowers' Identity Is Essential 119 Assess the Effectiveness of Hotlines and Provide Employee Compliance Training 123 Independent Counsel Should Report the Status and Results of the Investigation 124 Internal Whistleblowers Should Receive Meaningful Monetary Rewards 125 The Whistleblower Policy Must Be Communicated Effectively 127 There Should Be Milder Sanctions for Whistleblowers Involved in Illegal Group Activity 130 Retaliation Claims Should Be Independently Investigated 131 The Director of Corporate Compliance Should Become the Eyes and Ears of the Independent Directors 132 Major Dos and Don'ts for CEOs 134 Notes 135 PART IV: STATUTORY INCENTIVES AND SEC AWARD REGULATIONS Chapter 8: The False Claims Act: Qui Tam Cases 141 What Is a False Claim? 142 False Claims Act Bounties 144 U.S. Department of Justice Memorandum 146 Statute of Limitations 149 Notes 150 Chapter 9: IRS Whistleblowers 153 Section 7623(b): Mandatory Whistleblower Awards 155 Reduction of Award Percentage 156 Section 7623(a): Discretionary Awards 157 Form 211 158 IRS Whistleblowers Awards 159 IRS Award Determinations 160 Award Administrative Proceedings 162 Appeal to Tax Court 164 Duration of Process and Award Payment 164 Confi dentiality of Whistleblower 165 Right to Counsel 165 IRS Contracts 165 Disqualifi cation of U.S. Treasury Department Federal Employees 166 Notes 167 Chapter 10: Other Statutory Incentives and Protections for Whistleblowers 169 Act to Prevent Pollution from Ships 169 False Patent Marking Statute 170 U.S. Tariff Act of 1930 172 State False Claims Statutes 173 Whistleblower Protections 179 Barker v. UBS 180 Other Statutory Whistleblower Protections 185 Notes 186 Chapter 11: A Step-by-Step Guide to SEC Whistleblowers Awards under Dodd-Frank 189 Summary 190 SEC Investor Protection Fund 194 Does the Whistleblower Need an Attorney? 195 Step-by-Step Guide 196 Determining Whether the Over $1 Million Threshold Is 202 Satisfied Determining the Amount of an Award 202 Must an Employee Comply with the Company's Internal Compliance Program? 204 Confidentiality 205 Nonwaiver of Whistleblower Rights 205 Appeals 205 Anti-retaliation Provision 206 Notes 206 Appendix 1: IRS Form 211 207 Appendix 2: SEC Form TCR: Tip, Complaint or Referral 211 Appendix 3: SEC Form WB-APP: Application for Award for Original Information Submitted Pursuant to Section 21F of the Securities Exchange Act of 1934 229 Appendix 4: SEC Whistleblower Rules 239 About the Author 265 Index 267
Foreword xiii Acknowledgments xv Introduction 1 PART I: THE WHISTLEBLOWERS AND THE DODD-FRANK INCENTIVES Chapter 1: The Dramatic Expansion of Whistleblower Awards under Dodd-Frank 11 Whistleblower Provisions of Dodd-Frank 13 What Is "Original Information"? 14 What Are Violations of the Federal Securities Laws? 15 Rule 10b-5: Market Manipulation 19 Violating the Accounting Standards 20 False Financial Statements by Public Companies 20 Other Securities Laws 22 Protections for Whistleblowers 23 Commodity Exchange Act 23 Notes 25 Chapter 2: The Remarkable Story of Cheryl Eckard and the $96 Million Bounty under the False Claims Act 27 Who Is Cheryl Eckard? 27 Eckard's Post-termination Activities 28 Eckard's Superiors 29 Background Allegations 30 Alleged Violations 31 Timeline of Eckard's Alleged Activities 33 The Lessons of Glaxo 40 Notes 42 Chapter 3: The Pfi zer Whistleblowers Who Collected Over $100 Million under the False Claims Act 45 John Kopchinski 46 Bextra 47 The Complaint 48 Pfizer Lessons 51 Notes 53 PART II: DISINCENTIVES AND FACTORS MOTIVATING PUBLIC DISCLOSURE Chapter 4: Disincentives to Internal Whistleblowers 57 Financial Disincentives 58 Nonfi nancial Disincentives 59 Contractual Commitments and Fiduciary Duties 60 Ethics Resource Center Survey 61 Reinstatement as a Remedy 62 Empirical Study 65 Notes 67 Chapter 5: Women as Whistleblowers: Factors Motivating Public Whistleblowing 69 Sherron Watkins 69 Cynthia Cooper 71 Coleen Rowley 71 External Reporting by Internal Whistleblowers 72 Whistleblower Anonymity 74 Notes 74 PART III: ORGANIZATIONAL BEST PRACTICES Chapter 6: Why Should Organizations Adopt a Robust Whistleblower System? 79 Diminishment of Shareholder Wealth 80 Boards of Directors 81 We Were Duped! 82 Executive Whistleblowers 84 Why Independent Directors Cannot Rely Solely on Independent or Internal Auditors 86 Legal Standard 89 Caremark 90 Recommended Strategy 91 Criminal Liability of an Organization 92 Responsible Corporate Officer Doctrine 93 The Acme Markets Case 94 The U.S. Department of Justice Criminal Guidelines 96 The Disadvantages of a Robust Whistleblower System 97 Notes 98 Chapter 7: Establishing a Robust Whistleblower System 103 Problems with the Current Whistleblower System 104 Initial Steps 107 Elements of a Robust Whistleblower Policy 108 Independent Directors Must Be in Charge 109 The Whistleblower Program Must Be Independently Administered 111 Whistleblower Complaints Should be Investigated by Independent Counsel Reporting Directly to the Independent Directors 113 There Should Be No Presumption that Anonymous Complaints Are Less Deserving of Investigation 117 Motivations and Personality of the Whistleblower Are Not Relevant to the Truth of the Allegations 118 Absolute Protection of Whistleblowers' Identity Is Essential 119 Assess the Effectiveness of Hotlines and Provide Employee Compliance Training 123 Independent Counsel Should Report the Status and Results of the Investigation 124 Internal Whistleblowers Should Receive Meaningful Monetary Rewards 125 The Whistleblower Policy Must Be Communicated Effectively 127 There Should Be Milder Sanctions for Whistleblowers Involved in Illegal Group Activity 130 Retaliation Claims Should Be Independently Investigated 131 The Director of Corporate Compliance Should Become the Eyes and Ears of the Independent Directors 132 Major Dos and Don'ts for CEOs 134 Notes 135 PART IV: STATUTORY INCENTIVES AND SEC AWARD REGULATIONS Chapter 8: The False Claims Act: Qui Tam Cases 141 What Is a False Claim? 142 False Claims Act Bounties 144 U.S. Department of Justice Memorandum 146 Statute of Limitations 149 Notes 150 Chapter 9: IRS Whistleblowers 153 Section 7623(b): Mandatory Whistleblower Awards 155 Reduction of Award Percentage 156 Section 7623(a): Discretionary Awards 157 Form 211 158 IRS Whistleblowers Awards 159 IRS Award Determinations 160 Award Administrative Proceedings 162 Appeal to Tax Court 164 Duration of Process and Award Payment 164 Confi dentiality of Whistleblower 165 Right to Counsel 165 IRS Contracts 165 Disqualifi cation of U.S. Treasury Department Federal Employees 166 Notes 167 Chapter 10: Other Statutory Incentives and Protections for Whistleblowers 169 Act to Prevent Pollution from Ships 169 False Patent Marking Statute 170 U.S. Tariff Act of 1930 172 State False Claims Statutes 173 Whistleblower Protections 179 Barker v. UBS 180 Other Statutory Whistleblower Protections 185 Notes 186 Chapter 11: A Step-by-Step Guide to SEC Whistleblowers Awards under Dodd-Frank 189 Summary 190 SEC Investor Protection Fund 194 Does the Whistleblower Need an Attorney? 195 Step-by-Step Guide 196 Determining Whether the Over $1 Million Threshold Is 202 Satisfied Determining the Amount of an Award 202 Must an Employee Comply with the Company's Internal Compliance Program? 204 Confidentiality 205 Nonwaiver of Whistleblower Rights 205 Appeals 205 Anti-retaliation Provision 206 Notes 206 Appendix 1: IRS Form 211 207 Appendix 2: SEC Form TCR: Tip, Complaint or Referral 211 Appendix 3: SEC Form WB-APP: Application for Award for Original Information Submitted Pursuant to Section 21F of the Securities Exchange Act of 1934 229 Appendix 4: SEC Whistleblower Rules 239 About the Author 265 Index 267
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