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Pro-whistleblower organizations ask SEC to clarify protections for employees

Some 21 percent of employees who reported misconduct faced retaliation

There is a renewed effort to clarify the protections given to corporate whistleblowers by the Government Accountability Project (GAP) and the Labaton Sucharow law firm.

The project has asked the Securities and Exchange Commission (SEC) to clarify rules on how corporations could silence whistleblowers via confidentiality agreements and other methods.

Some 250 organizations, including the Project on Government Oversight and the International Brotherhood of Teamsters, filed two petitions with the SEC.

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The SEC Whistleblower Program, which was enacted four years ago in connection with the Dodd-Frank Act, allows whistleblowers to file complaints anonymously and prohibits retaliation by employers. Whistleblowers may also qualify for substantial monetary awards. Employees can get between 10 and 30 percent of the money recovered by the government, if a tip ends up being a government enforcement action. Labaton Sucharow is one of the law firms representing such whistleblowers, according toThe Wall Street Journal.

"As awareness and interest in the SEC Whistleblower Program and other similar programs has grown, they have come under stealth attack by corporate America," Jordan Thomas, chair of the whistleblower representation practice at Labaton Sucharow, said in a statement.

"If the SEC doesn’t adopt appropriate counter-measures, gag orders, retaliation and other forms of legal bullying will quickly erode the potential of this powerful investor protection tool," he warned in the statement.

Some of the legal maneuvers employed by companies are: keeping employees from consulting independent attorneys, requiring notices of external reporting, asking for waivers of future whistleblower awards, and suggesting that lawsuits will be used to enforce secrecy agreements, according to the statement.

“These and other troubling legal tactics effectively topple each of the three pillars of the SEC Whistleblower Program – anonymous reporting, employment protections and monetary awards,” the statement explained.

"Virtually every corporation in America has internal policies that encourage employees to report wrongdoing and promise to protect them from retaliation for doing so," Tom Devine, GAP legal director, said in the statement. "The problem is the reality gap between what these organizations say and what they do, because they have not been held accountable. Currently, corporations have little or nothing to lose from legal bullying. The worst that can happen is they won’t get away with it. The SEC can change this."

In the 2013 National Business Ethics Survey, the Ethics Resource Center found that retaliation against whistleblowers has increased. Some 21 percent of employees who reported misconduct faced retaliation, compared to 12 percent in 2007.

The second petition submitted to the SEC asked the commission to hold public hearings on workplace retaliation, discuss ways to increase reporting, create an advisory committee, and address rulemaking to clarify and strengthen whistleblower protections.

The Journal reported how officials are now investigating claims that KBR required employees to sign statements “prohibiting them from reporting fraud allegations to anyone, including the government,” The Journal reported. KBR said it “does not prevent its employees from reporting perceived misconduct.”

A Whistleblower Summit for Civil and Human Rights will be held in Washington D.C., starting on July 28. On July 30, National Whistleblower Appreciation Day will be held and GAP will sponsor a panel discussion on financial whistleblowing.

Contributing Author

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Ed Silverstein

Ed Silverstein is a veteran writer and editor for magazines, websites and newspapers. A graduate of Harvard's Kennedy School of Government, he has won several...

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