FCPAméricas Blog

Como se dice “Whistleblower”? (Part 2: Do Protections Extend to Latin Americans?)

Author: Matteson Ellis

The Frank-Dodd whistleblower provisions became effective almost exactly six months ago. Then, three months later, the SEC provided initial data on the whistleblower program in an Annual Report to Congress. From this report, we know that 10% of the tips in the first several weeks came from abroad, and that some of those were from Latin America.

[Part 1of this blog series considers how Latin Americans are learning about Dodd-Frank. Part 2 considers whether whistleblower protections can extend to Latin Americans.]

Given this information, it is helpful to consider whether or not whistleblower anti-retaliatory protections extend to foreigners, in particular Latin Americans.

Under Section 21F of Dodd-Frank (provided here), whistleblowers are granted a level of anonymity in the disclosure process. Employee whistleblowers are also provided a private cause of action against a corporation that takes retaliatory action against them. Examples of retaliation might be termination, demotion, threats, suspension, or other discrimination. Potential relief to the whistleblower can include reinstatement, double back pay, litigation costs, and attorneys’ fees. The protections apply irrespective of whether or not the whistleblower is ultimately entitled to an award.

These protections clearly incentivize whistleblowers in the United States to disclose violations to the government. But what about foreigners?

Charly Simon, a Texas attorney, has researched whether Dodd-Frank protects foreign whistleblowers. She concludes that the law is simply unclear on this issue.

To help illuminate the matter, she looks at precedent of whistleblower treatment under Sarbanes-Oxley (SOX) as a guide. In that context, she concludes that foreign whistleblowers have had to overcome significant jurisdictional hurdles to successfully seek redress for retaliation suffered abroad. The courts cite four principal reasons for rejecting protections: (1) a lack of clear intent in the legislative history, (2) statutory provisions indicating a contrary decision by Congress, (3) enforcement concerns, and (4) a lack of investigatory powers among the enforcement agencies tasked with whistleblower protection.

But Ms. Simon argues that, with respect to the FCPA, courts should nonetheless extend protections to foreigners. She points to the broad jurisdictional reach of the FCPA and how it would be consistent similarly to extend protections to foreigners. She distinguishes SOX from the FCPA – while SOX responded to domestic issues created by U.S. companies like Enron, the FCPA is written to address activity abroad, i.e. corruption that U.S. companies face when doing business overseas. She looks at the ways that Dodd-Frank changes the nature of SOX whistleblower protections, like giving an automatic right to a federal court action, bypassing the U.S. Department of Labor entirely. She thinks these changes are sufficient to allay concerns that courts raise in the SOX context.

Time will tell whether courts will treat whistleblower provisions under Dodd-Frank differently than they do under SOX. Nonetheless, given the seemingly unsettled nature of the law, companies operating in Latin America or elsewhere probably do not want to take on an additional risk by assuming that protections do not apply to foreigners.

The FCPAméricas blog is not intended to provide legal advice to its readers. The blog entries and posts include only the thoughts, ideas, and impressions of its authors and contributors, and should be considered general information only about the Americas, anti-corruption laws including the U.S. Foreign Corrupt Practices Act, issues related to anti-corruption compliance, and any other matters addressed. Nothing in this publication should be interpreted to constitute legal advice or services of any kind. Furthermore, information found on this blog should not be used as the basis for decisions or actions that may affect your business; instead, companies and businesspeople should seek legal counsel from qualified lawyers regarding anti-corruption laws or any other legal issue. The Editor and the contributors to this blog shall not be responsible for any losses incurred by a reader or a company as a result of information provided in this publication. For more information, please contact Info@MattesonEllisLaw.com.

The author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author.

© 2012 Matteson Ellis Law, PLLC

Matteson Ellis

Post authored by Matteson Ellis, FCPAméricas Founder & Editor

Categories: Enforcement, FCPA, Risk Assessments, Whistleblowers

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One Response to “Como se dice “Whistleblower”? (Part 2: Do Protections Extend to Latin Americans?)”

  1. Five Things You Did Not Know about the SEC Whistleblower Program - Legal, Ethics and Compliance Says:

    […] Office has made it clear that it is already receiving tips from all over the world. Many have asked if the statute’s anti-retaliatory protections extend to foreign whistleblowers. The rules are not […]

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