SEC & CFTC Protections

By the late 1990s and early 2000s, the collapse of energy giant Enron, telecom giant WorldCom, and the theft of $150 million from Tyco International demonstrated the need for much tighter regulation and controls. As The Economist observed at the time: “[t]he capital markets, and indeed capitalism itself, can function efficiently only if the highest standards of accounting, disclosure and transparency are observed.” Consequently, these disastrous frauds resulted in regulatory changes, including passage of the Sarbanes-Oxley Act (SOX), which created whistleblower protection for employees of publicly traded companies. However, these reforms could not contain the fraudsters for long.

Consequently, in 2010, as part of the Dodd-Frank law, the SOX protections were expanded and the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) announced new whistleblower protection regulations. These provisions generally prohibit employers from retaliating against employees who: (1) blow the whistle to the
Commission about securities and commodity futures regulatory violations; (2) assist the government in investigating such violations; or (3) make disclosures to the government as required by law. Employers are also prohibited from requiring employees to sign confidentiality agreements that would prevent them from disclosing fraud to the government.

Importantly, these regulations apply to affiliates and subsidiaries whose information is included in the financials of companies under the SEC’s and CFTC’s jurisdiction; the regulations also apply to ratings organizations, like Standards & Poor’s and Moody’s.
Employees who suffer retaliation are entitled to a variety of remedies, including:

  • Reinstatement of their job, with seniority
  • Twice any lost back pay, with interest
  • Litigation costs and attorneys’ fees paid by the employer

If you have experienced the type of retaliation described above, please contact us. Our legal team has gathered a wealth of knowledge and skill over several decades of representing employee whistleblowers.