How does one seek non-SOX whistleblower protection? 2777
Allen v. Administrative Review Board, No. 06-60849 (5th Cir. Jan. 22, 2008).
In the above opinion, ‘the Allen Court held: ‘Importantly, an employee’s reasonable but mistaken belief that an employer engaged in conduct that constitutes a violation of one of the six enumerated categories bank or securities fraud, any rule or regulation of the SEC, or any provision of federal law relating to fraud against shareholders] is protected.’ This is significant because it counters a popular defense contention that a SOX whistleblower must demonstrate that shareholders have been harmed by the SEC violation or other misconduct about which the whistleblower complained.’
If a completely unrelated lawsuit, Defendant is now trying to file a countersuit and pointing to the fact the Plaintiff’s SOX complaints regarding bank fraud were dismissed. Plaintiff’s SOX complaints were dismissed only because the Defendant didn’t have a class of securities registered under section 12 of the Securities Exchange Act of 1934 (15 U.S.C. 781)’ the rulings didn’t imply in any way, shape or form that the Plaintiff’s assertions regarding Defendant’s civil/criminal wrongs were/are invalid.
So where does a Plaintiff go (to what court or government official or government agency) to seek the whistleblower protections afforded to SOX complainant’s under the Allen Court ruling? UPDATE: If I am reading correctly, one would file with the OSHA Office of Whistleblower Protection if one is an employee of a company that is covered by the SOX whistleblower provision.
BUT where does one go (to what court or government official or government agency) if they are NOT an employee of a company that is covered by the SOX whistleblower provision?
The employment law protections of section 806 of the Sarbanes-Oxley Act of 2002 only cover employees of public companies THAT are employed IN THE USA (i.e. who have securities registered with the SEC under section 12(b) or section 12(g) or who file periodic reports to the SEC as a result of a public offfering of securities in the US under section 15(d) of the Securities Exchange Act). Employees outside the USA are not protected (a US Court of Appeals has decided that).
You can easily check if a company files reports with the SEC on the sec.gov in the SEC’s EDGAR system by searching for the company and then searching for annual reports on form 10-K (or form 20-F or form 40-F).
You mention that the company did NOT have securities registered under section 12 of the Securities Act. Did it make a public offering of securities in the US and as a consequence have its securities registered under the Securities Act of 1933 and thus have a reporting obligation under section 15(d) of the Securities Exchange Act of 1934?
If not the employer is a private company and you need to check whether any other federal law or rule relating to banking regulation (e.g. the websites of Office of the Comptroller of the Currency, the Federal Reserve Board, the Federal Deposit Insurance Corporation), or any state law relating to banking regulation of banks with state charters or any state law on employment covers the reported misconduct. The applicable law or rule (if any) will specify to which agency or court the employee needs to turn to. Organizations, such as the National Whistleblower Center (whistleblowers.org) or employment lawyers may be able to help.
Get a good employment lawer that is specialized in whistleblowing cases and obtain an expert witness on the subject of the reported misconduct. Lawyers and judges tend to have little technical knowledge of accounting, banking or other business related areas and often have a hard time to interpret the law in those areas if the facts get highly technical in a business context.
Thanx for the info.
I have searched the sec.gov website and can find no reference to the current names under which the present company is ‘doing business as’.
But the present company was originally part of Bendix Corporation which offered public stock in 1924. According to a wiki page reference, the Bendix Corporation became the Bendix Aviation Corporation sometime in the late 1920s/early 1930s.
According to the wiki page:
‘In the decades between 1970 and 1990, Bendix went through a series of mergers, sales and changes with partners or buyers including Raytheon, Allied Signal and others. This diluted its corporate identity, though for some years these companies used the Bendix brand for some of their products, such as aircraft flight control systems.’
At some point (reportedly 1978), TransTechnology Corporation acquired the assets of the present company which it later sold off to a private party sometime in the early 1990s. This present company has supposedly been in private hands ever since.
Considering that the present company (now supposedly in private hands) was once publicly owned (eg. Bendix Corporation which issued stock in 1924), could an agrument be made that the present company is bound by and subject to the Sarbanes-Oxley Act of 2002 (SOX) provisions in some way, shape or form?
BTW: Is there any statute of limitations for reporting ‘bank fraud’ (eg. cooking the books while doing business with a publicly trade bank) to a federal agency for investigation?
Does that mean that you do not know the name of the corporate holding company that controls the company that is the employer?
If the issuer (i.e. the corporate holding company) does not currently have securities registered with the Securities and Exchange Commission under section 12 of the Securities Exchange Act or has a reporting obligation to the SEC pursuant to section 15(d) of the Securities Exchange Act, then the employment law (right to reinstatement and back pay, etc.) protections of Section 806 of the Sarbanes-Oxley Act (codified in title 18 section 1514A of the US Code) do not apply. Even if it would apply, then the statute of limitations would be 90 days after the date on which the violation occurs (i.e. the filing of an action with the Department of Labors needs to be no later than that) (see 18 USC 1514A (b)(2)(D)).
Section 1107 of the Sarbanes-Oxley Act that was codified in the US criminal code in title 18 section 1513(e) contains criminal sanctions against anybody that knowingly, with the intent to retaliate, takes
any action harmful to any person, including interference with the
lawful employment or livelihood of any person, for providing to
a law enforcement officer any truthful information relating to the
commission or possible commission of any Federal offense (fines or imprisonment of up to 10 years). This applies both to public and private companies and not just the employer (i.e. the company), but to ‘whoever’. After you have informed a law enforcement officer about the possible commission of bank fraud (bank fraud is a federal offense, but better check the elements of bank fraud in the US criminal code), then you should be protected from retaliation. However, the law does not specifically specify the burden of proof for claiming that an act by the employer was in retaliation for providing the information to law enforcement. It will be both dangerous for your employment but also easier to prove that they retaliated ‘knowingly’ if you inform your employer by registered mail about having provided the information to a law enforcement officer and notifying them that 18 USC 1513(e) contains criminal sanctions for the employer for retaliating against the employee. However, they could probably get away if they had a general downsizing that includes you or if your performance was poor.
In any case, consult an employment lawyer that also knows this criminal law provision before taking any action.
The parent company (KR Acquisition Corp) of the present company is mentioned in a 1997 SEC filing as being a shareholder in Scientech, Inc.
The owner of the parent company (and thus of the present company and three other companies all under the KR Acquisition Corp umbrella) served as a Senior VP at Scientech, Inc. Having been a Senior VP of a publicly held company (eg. Scientech), is the owner subject to the provisions of SOX in any way, shape or form whatsoever?
BTW: Scientech LLC was acquired by Curtiss Wright (NYSE = CW) in 2007.
NO. If KR Acquisition Corp did not have any securities registered with the SEC at the time of retaliation then the labor law protections of section 806 do not apply. Being a shareholder of a public company has no relevance for section 806. Your employer is a company and not a person and section 806 simply enforces the employee’s rights versus the employer with whom the employee has an employment contract.
Okay, so where does one go to file for whistleblower protection under SOX Section 1107 which seems to cover ‘whoever’ (including a private company) retaliation?
The Department of Justice?
The Attorney General?
As far as I know, the Federal Buereau of Investigations (FBI) is in charge of investigating federal crimes.
As I mentioned previously, section 1107 of the Sarbanes-Oxley Act that was codified in the US criminal code in title 18 section 1513(e) contains criminal sanctions against anybody that knowingly, with the intent to retaliate, takes any action harmful to any person, including interference with the lawful employment or livelihood of any person, for providing to
a law enforcement officer any truthful information relating to the
commission or possible commission of any Federal offense (fines or imprisonment of up to 10 years).
This means that your employer will only be punished if:
- you provided truthful information relating to the commission or possible commssion of any federal offense to a law enforcement officer; AND
- the FBI and the US District Attorney can prove that your employer knowingly, with the intent to retaliate took any action harmful to you, including interference with your lawful employment or your livelihood.
That is a pretty high burden of proof that the FBI and the US District Attorney need to establish. They need to prove that your employer knew that you provided the information to a law enforcement officer and that the action of your employer (e.g. to fire you) was motivated by retaliation and not by any other reason, such as poor job performance on your side or by the employer making losses and needing to cut staff cost in general. Since this is a provision in federal criminal law, the burden of proof is not one of preponderence of the evidence (i.e. it is more likely that the US District Attorney is right with what he claims than what your employer claims), but one of proof beyond reasonable doubt that your employer may be right in what he claims. Unless your employer was dumb enough to state his reason for retaliation against you in writing or telling it in front of witnesses who are willing to testify against your employer in court, it may be hard to prove the employer’s intent beyond a reasonable doubt.
It will only punish retaliation by your employer after he has already retaliated against you, it does not provide that you get your job back or that you get any monetary compensation.