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Protecting Your Company’s Assets as Whistleblowing Rises Protecting Your Company’s Assets as Whistleblowing Rises

Protecting Your Company’s Assets as Whistleblowing Rises

The following is an excerpt of an article written by Matthew Fornshell and published in the American Bar Association's Litigation magazine. For more information, contact Matthew Fornshell. 

Picture a quiet Monday morning. The dark coffee in your mug is piping hot, and trails of steam slowly swirl skyward as a stray ray of sunshine darts into your kitchen. You opt to skip the paper today. Instead, you open the email on your phone. As you raise the coffee cup to your mouth, an email subject line snatches your attention:
To: General Counsel
Subject: URGENT!! John Doe says he will send our trade secrets to the SEC, claims he’ll be a whistleblower.
The pleasantness of the morning evaporates. The question is, now that an employee says he has gone or will go to the Securities and Exchange Commission (SEC), how do you react? Can you do anything to protect the company’s trade secrets? What steps can you take to ensure your actions aren’t perceived as retaliation against John Doe or obstruction of the government?
Almost omnipresent in the news are stories of fresh white-collar criminal investigations, insider trading fines, or whistleblowers. Since the Great Recession and the passage of the Dodd-Frank Act, corporate fault, malfeasance, and crime have occupied the interest of the public—with no topic more prevalent than that of the whistleblower. The public largely sees whistleblowers as virtuous truth tellers. This could relate to the lack of public trust in the government’s ability to root out bad actors in the corporate world or possibly a perception of greater corporate corruption generally. Regardless of the reason, whistleblowers are here to stay and becoming more and more prevalent.
In addition, the new promise of huge bounties under Dodd-Frank’s whistleblower provisions has created an atmosphere that encourages whistleblowing. Unsurprisingly, more companies and executives face the possibility that one of their employees will go to the SEC or another government agency. This article explores the origins of the Dodd-Frank whistleblower provisions and recent whistleblower headlines. It also discusses the dangers of retaliation and obstruction suits and strategies to protect companies from these pitfalls.
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