FCPAméricas Blog
Whistleblowers: 2013 Year In Review
1.23.2014
Much has been written about FCPA enforcement trends in 2013. This post highlights five relevant developments of the last year related to SEC whistleblowers.
Increase in the number of tips received by the SEC. The SEC 2013 Annual Report to Congress on the Dodd-Frank Whistleblower Program reports that “the number of whistleblower tips and complaints the Commission received annually increased from 3,001 in the 2012 fiscal year to 3,238 in the 2013 fiscal year.” Specifically, 149 of the tips received in the 2013 fiscal year were related to alleged FCPA violations. In fiscal year 2012, 115 tips were related to FCPA issues. From August 2011, when the SEC’s Office of The Whistleblower was established, until the end of fiscal year 2013, a total of 6,573 tips and complaints from whistleblowers were received.
Increasing awards. Since the beginning of the whistleblower program, the SEC has awarded six whistleblowers, four of them in the fiscal year 2013. In September, the SEC announced an award of more than $14 million to a whistleblower, the largest to date under the program.
More tips from more countries in the Americas. The SEC is receiving numerous tips from abroad. The 2013 Annual Report to Congress indicates that, since the beginning of the whistleblower program, the Commission has received tips from 68 countries outside the United States. In fiscal year 2013 alone, the SEC received tips from 56 countries (including the United States).
From the Americas, (not considering the United States and Canada, where most of the whistleblowers in the region reside), in fiscal year 2013, the SEC received 25 tips from 10 countries: Argentina (6 tips), Brazil (4 tips), Mexico (4 tips), Curacao (4 tips), Colombia (2 tips), Costa Rica (1 tip), Belize (1 tip), Cayman Islands (1 tip), El Salvador (1 tip), and Panama (1 tip). Though it is not clear whether the tips from the Americas are related to FCPA or other securities issues, the total number of tips, as well as the number of countries in the region from where they came, increased in the last fiscal year. In fiscal year 2012, the SEC received 17 tips from 5 countries: Venezuela (6 tip), Mexico (4 tip), Brazil (3 tips), Argentina (1 tip), Bolivia (1 tip), Curacao (1 tip), and Dominican Republic (1 tip).
Reach of whistleblower protections. In October 2013, in Liu v. Siemens AG, Civ. No. 13 Civ. 317 (WHP) Slip Op. (S.D.N.Y. Oct. 21, 2013), the District Court of the Southern District of New York dismissed a complaint brought under the Anti-Retaliation Provisions of the Dodd-Frank Act in which the employee was allegedly terminated for reporting possible wrongdoing (see the opinion here).
This case is noteworthy because of the possible implications for foreign whistleblowers. The plaintiff in Liu, a resident of Taiwan and an employee who worked at the Chinese office of Siemens, alleged that the company’s healthcare division engaged in a kickback scheme and reported it internally. The plaintiff alleged that, as a result, he received negative performances, had his responsibilities limited, and was later fired.
The federal court judge explained that, “this case was brought by a Taiwanese resident against a German corporation for acts concerning its subsidiary relating to alleged corruption in China and North Korea. The only connection to the United States is the fact that Siemens has ADRs that are traded on an American Exchange.” It further held that “there is no indication that Congress intended the Anti-Retaliation Provision to apply extraterritorially.” As a result, the court dismissed the complaint “because the Anti-Retaliation Provision does not apply overseas.” As such, the Liu case may impact the ability of foreign whistleblowers to seek protection under the Anti-Retaliation Provisions of the Dodd-Frank Act.
The federal court judge was careful to clarify that the issue of the case was “not whether persons located abroad can be whistleblowers” and thus eligible to receive monetary awards. It will be interesting to see how courts decide other cases where foreign whistleblowers have greater connections to the United States.
Future developments in the region? The OECD Working Group on Bribery’s Phase 2 Report on Brazil recommended that the country “adopt comprehensive measures to protect public and private sector whistleblowers in order to encourage those employees to report suspected cases of foreign bribery without fear of retaliation.” Similar recommendations were made in the OECD reports on Argentina and Mexico.
In Brazil, a few bills related to whistleblowers have been presented to Congress in the recent past and are currently pending. The Dodd-Frank Whistleblower Program seems to have influenced Brazilian legislators to incorporate the notion of monetary awards to whistleblowers. In at least one bill the influence is explicit – the author used it as justification of the award program to the House: “This award model is very successful in the United States, having thousands or millions of inspectors that will be watchful in defending the public property.” The Brazilian bills are more focused on awarding whistleblowers for tips that lead to successful enforcement actions rather than on creating whistleblower protections. They say nothing or superficially address protections against retaliation.
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Post authored by Carlos Henrique da Silva Ayres, FCPAméricas Contributor
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