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SEC Brings First Stand-Alone Anti-Retaliation Enforcement Action Under Dodd-Frank
4 October 2016
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Last week, the SEC brought its first stand-alone whistleblower retaliation case under Dodd-Frank, alleging that a casino gaming manufacturer retaliated against an employee for raising concerns about the company’s accounting methodology. The company agreed to pay $500,000 to settle the matter without admitting or denying wrongdoing.
While the company could not substantiate the whistleblower’s claims, and the SEC’s order alleged no underlying violations of securities laws, the SEC’s action was brought based on the conduct of the company after the whistleblower reported to his managers, the company’s internal complaint hotline and the SEC. Specifically, the whistleblower was removed from significant business opportunities while an internal investigation was pending, and he was terminated when it concluded.
This is the first SEC enforcement action to allege retaliation based on whistleblower activity that did not lead to a substantive violation of the securities laws. Accordingly, it is the latest reminder that employers must implement robust anti-retaliation policies that are consistently applied, even when whistleblower claims turn out to be unsupported.
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