Inside or out? The dodd-frank whistleblower program's antiretaliation protections for internal reporting

Temple Law Review

Volumn 86, Issue 4, 2014, Pages 721-761

  Pacella, Jennifer M ^a  

^a CITY UNIVERSITY OF NEW YORK   (United States)

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EID: 84922180346     PISSN: 08998086     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (125)

1. ∗7 (S.D.N.Y. May 21, 2013)
2. Genberg v Porter, 935 F. Supp. 2d 1094, 1105-07 (D. Colo. 2013)
3. ∗4-5 (D. Conn. Sept. 25, 2012)
4. Nollner v S. Baptist Convention, Inc., 852 F. Supp. 2d 986, 997 (M.D. Tenn. 2012)
5. ∗6 (S.D.N.Y. May 4, 2011).
6. Asadi v G.E. Energy (USA), L.L.C., 720 F. 3d 620, 621 (5th Cir. 2013).
7. ∗1 (S.D. Tex. June 28, 2012).
8. The Second Circuit later decided that the protections of Dodd-Frank do not apply extraterritorially in Liu v Siemens AG, 763 F. 3d 175, 180 (2d Cir. 2014). See infra notes 135 and 152 for a discussion of the court's holding in Siemens.
9. Asadi v G.E. Energy (USA), L.L.C., 720 F. 3d 620, 623 (5th Cir. 2013).
10. See, e.g., Inouye v Kemna, 504 F. 3d 705, 714 (9th Cir. 2007)
11. ("Absent binding precedent, we look to all available decisional law, including the law of other circuits and district courts, to determine whether the right was clearly established." (quoting Osolinski v Kane, 92 F. 3d 934, 936 (9th Cir. 1996)
12. ∗2 (6th Cir. Mar. 30, 1994) (refusing to accept a district court opinion as binding precedent but acknowledging its persuasive value).
13. Implementing the Dodd-Frank Wall Street Reform and Consumer Protection Act, U.S. SEC. & EXCH. COMM'N, http://www.sec.gov/spotlight/dodd-frank.shtml (last visited Aug. 21, 2014).
14. Dodd-Frank Act, Pub. L. No. 111-203, 124 Stat. 1376, 1376 (2010)
15. see also Henry Klehm III et al., Securities Enforcement Has Crossed the Border: Regulatory Authorities Respond to the Financial Crisis with a Call for Greater International Cooperation, but Where Will that Lead?, 13 U. PA. J. BUS. L. 927, 936 (2011) (noting that the recent financial crisis "triggered ambitious legislative reform by the United States Congress, culminating in the historic [Dodd-Frank Act]")
16. Scott L. Silver & Janine D. Garlitz, SEC Whistleblower Incentives Under the Dodd-Frank Wall Street Reform Act, 18 PIABA B.J. 169, 169-70 (2011) (noting the purposes of the Dodd-Frank legislation, "which is arguably the most significant financial securities-related legislation in modern history.").
17. Eugene A. Ludwig, Assessment of Dodd-Frank Financial Regulatory Reform: Strengths, Challenges, and Opportunities for a Stronger Regulatory System, 29 YALE J. ON REG. 181, 183 (2012).
18. Oversight of Dodd-Frank Act Implementation, COMM. ON FIN. SERVS, http://financialservices.house.gov/dodd-frank/ (last visited Aug. 21, 2014).
19. Geoffrey Christopher Rapp, States of Pay: Emerging Trends in State Whistleblower Bounty Schemes, 54 S. TEX. L. REV. 53, 59 (2012).
20. Joel Androphy et al., The Intersection of the Dodd-Frank Act and the Foreign Corrupt Practices Act: What All Practitioners, Whistleblowers, Defendants, and Corporations Need to Know, 59 THE ADVOC. (TEXAS) 19, 24 (2012).
21. See, e.g., Proposed Rules for Implementing the Whistleblower Provisions of Section 21F of the Securities Exchange Act of 1934, 75 Fed. Reg. 70, 488, 70, 496 (proposed Nov 17, 2010) (to be codified at 17 C.F.R. pts. 240, 249) (requesting public comment and acknowledging the concern emerging that the bounty program could have the effect of bypassing internal compliance programs)
22. Gregory A. Brower & Brett W. Johnson, When Enough Is Not Enough: Two Court Rulings Complicate Corporate Compliance Efforts, LEGAL BACKGROUNDER, Oct. 2013, at 3, available at http://www.wlf.org/upload/legalstudies/legalbackgrounder/10-11-13BrowerJohnson-LB.pdf (noting that many large companies were concerned during the SEC rulemaking process that the program would incentivize employees to bypass internal reporting channels)
23. Joshua Ernst, Comment, The Dodd-Frank Whistleblower Provision: Throwing Fuel on the Fire for Foreign Corrupt Practices Act Compliance, 43 ARIZ. ST. L.J. 1313, 1315 (2012) (stating that whistleblower statutes with monetary awards hinder the attempts of companies trying to "maintain a culture of compliance")
24. Jenny Lee, Note, Corporate Corruption & The New Gold Mine: How the Dodd-Frank Act Overincentivizes Whistleblowing, 77 BROOK. L. REV. 303, 331-32 (2011) (discussing the negative consequences to employers of Dodd-Frank's whistleblower provisions)
25. Michael Neal, Note, Securities Whistleblowing Under Dodd-Frank: Neglecting the Power of "Enterprising Privateers" in Favor of the "Slow-Going Public Vessel," 15 LEWIS & CLARK L. REV. 1107, 1108-09 (2011) (suggesting that offering monetary awards for whistleblowing undermines the effectiveness of internal compliance programs)
26. Ted Uliassi, Comment, Addressing the Unintended Consequences of an Enhanced SEC Whistleblower Bounty Program, 63 ADMIN. L. REV. 351, 361-65 (2011) (discussing how the existence of a reward system for whistleblowers may hinder the effectiveness of the program)
27. Jonathan L. Awner & Denise Dickins, Will There Be Whistleblowers? REGULATION, Summer 2011, at 36-37 (noting the public concerns that arose during the SEC rulemaking process over the potential for individuals to make unsubstantiated whistleblowing accusations in order to gain monetary awards).
28. Id.; see also Regulatory Developments 2010, 66 BUS. LAW. 665, 704 (2011) ("In addition to the incentive provisions, the Dodd-Frank Act significantly enhances whistleblower [antiretaliation] protections.").
29. See Joel D. Hesch, Whistleblower Rights and Protections: Critiquing Federal Whistleblower Laws and Recommending Filling in Missing Pieces To Form a Beautiful Patchwork Quilt, 6 LIBERTY U. L. REV. 51, 105-06 (2011) (noting that although Dodd-Frank significantly expands protection beyond what was available under SOX, "there is one glaring difference and inconsistency between the two acts" in that Dodd-Frank appears to protect only external reporting while SOX protects both internal and external reporting).
30. See Richard Moberly, Sarbanes-Oxley's Whistleblower Provisions: Ten Years Later, 64 S.C. L. REV. 1, 4 (2012) (noting that "government administrators and adjudicatory decision makers undermined [SOX's] protections")
31. Terry Morehead Dworkin, SOX and Whistleblowing, 105 MICH. L. REV. 1757, 1764-65 (2007) (discussing the inadequacies of SOX in protecting whistleblowers)
32. Valerie Watnick, Whistleblower Protections Under the Sarbanes-Oxley Act: A Primer and a Critique, 12 FORDHAM J. CORP. & FIN. L. 831, 833 (2007) (finding that rulings on Sarbanes-Oxley whistleblower claims and the implementation of regulations adopted by the Department of Labor reveal that whistleblower protections under SOX are not strong enough to protect employee-whistleblowers and to adhere to Congress's intent).
33. Richard E. Moberly, Unfulfilled Expectations: An Empirical Analysis of Why Sarbanes-Oxley Whistleblowers Rarely Win, 49 WM. & MARY L. REV. 65, 67, 91-95 (2007).
34. Amy Goodman et al., SEC Adopts Final Rules Implementing Whistleblower Provisions of Dodd-Frank Act, WALL STREET LAWYER, July 2011, at 1.
35. Securities Whistleblower Incentives and Protections, 76 Fed. Reg. at 34, 301; see also Justin Blount & Spencer Markel, The End of the Internal Compliance World As We Know It, or an Enhancement of the Effectiveness of Securities Law Enforcement? Bounty Hunting Under the Dodd-Frank Act's Whistleblower Provisions, 17, FORDHAM J. CORP. & FIN. L. 1023, 1055 (2012) (describing how the SEC rules interpreting Dodd-Frank seek to "strike the appropriate balance between internal and external reporting by incentivizing, but not requiring, reporting through internal compliance channels").
36. 17 C.F.R. §§ 240.21F-4(b)(5), (7), 240.21F-6(a) (2014); Blount & Markel, supra note 56, at 1055; see also Press Release, SEC, SEC Adopts Rules To Establish Whistleblower Program (May 25, 2011), available at http://www.sec.gov/news/press/2011/2011-116.htm (discussing that although the final rules do not require employee whistleblowers to first report violations internally to obtain an award, they strengthen incentives to encourage employees to utilize their employer's internal compliance program).
37. Securities Whistleblower Incentives and Protections, 76 Fed. Reg. at 34, 300-01.
38. See Stephen W. Aronson & Ian T. Clarke-Fisher, Preventive Measures in Response to Recent Expansions of the Whistle-Blower Retaliation Protections Under Dodd-Frank, WESTLAW J. EMP., Jan. 2013, at 1-4 (describing this string of pro-whistleblower cases)
39. Barbara Hoey & Jeanne Barber, Keeping Current: Two Federal Courts Issue Expansive Interpretations of the Dodd-Frank Act's Whistleblower Definition, BUS. L. TODAY, Oct. 2012, at 1 (noting that these decisions have "expanded the universe of employees who can potentially bring Dodd-Frank retaliation claims, and are likely to embolden the plaintiffs' bar and spawn more lawsuits.")
40. Nicolle L. Jacoby & Kristina A. Moon, Expanded Protection for Whistleblowers: Emerging Trend Stems from Dodd-Frank Anti-Retaliation Provisions, N.Y. L.J., Mar. 25, 2013, at 9, 12 (recognizing a potential trend of extending protections).
41. ∗3 (S.D. Tex. June 28, 2012).
42. ∗5. Under Chevron, a court reviewing an agency interpretation must determine "whether the agency's answer is based on a permissible construction of the statute." Chevron U.S.A. Inc v Natural Res. Def. Council, Inc., 467 U.S. 837, 843 (1984).
43. ∗5 (D. Conn. Sept. 25, 2012)
44. Nollner v S. Baptist Convention, Inc., 852 F. Supp. 2d 986, 994 (M.D. Tenn. 2012)
45. ∗5 (S.D.N.Y. May 4, 2011)).
46. Id. (quoting TRW Inc v Andrews, 534 U.S. 19, 31 (2001)).
47. ∗3-5 (D. Conn. Sept. 25, 2012)
48. Nollner v S. Baptist Convention, Inc., 852 F. Supp. 2d 986, 993-95 (M.D. Tenn. 2012)
49. ∗5 (S.D.N.Y. May 4, 2011)).
50. ∗12-13 (S.D.N.Y. May 8, 2014)
51. ∗6 (D.N.J. Mar. 11, 2014)
52. Rosenblum v Thomson Reuters (Markets) LLC, 984 F. Supp. 2d 141, 147-48 (S.D.N.Y 2013)
53. Ellington v Giacoumakis, 977 F. Supp. 2d 42, 45 (D. Mass. 2013).
54. ∗7-12 (D. Neb. May 21, 2014).
55. ∗7-9 (M.D. Fla. May 12, 2014)
56. ∗3-6 (N.D. Cal. Sept. 27, 2013)
57. ∗4 (D. Colo. July 19, 2013).
58. ∗4 n. 5 (S.D.N.Y. Feb. 21, 2014).
59. No other circuit court besides the Fifth has yet addressed this issue and Asadi did not file a petition for writ of certiorari to the Supreme Court subsequent to the Fifth Circuit's decision. See Richard Marmaro, Recent Trends in Government Enforcement in White Collar Defense Cases, ASPATORE (Jan. 2014)
60. ∗5 (noting that the decisions to have examined this issue could lead to a potential circuit split). Although the question of whether internal whistleblowers are protected from retaliation under Dodd-Frank was presented to the Second Circuit in Liu v Siemens AG, that court resolved the question before it on other grounds - that the antiretaliation protection provisions of Dodd-Frank do not apply extraterritorially. 763 F. 3d 175, 180 (2d Cir. 2014).
61. In Siemens, the SEC filed an amicus brief in support of Liu, the appellant, arguing that the ambiguity of the language of Dodd-Frank warrants deference to the agency's reasonable interpretation protecting internal whistleblowers. See Brief for U.S. Sec. & Exch. Comm'n as Amici Curiae Supporting Appellant, Liu v Siemens AG, 763 F. 3d 175 (2d Cir. 2014) (No. 13-4385-cv)
62. Mystica M. Alexander, Defining the Whistleblower Under Dodd-Frank: Who Decides? 5 CAL. L. REV. CIRCUIT 278, 283-84 (2014). Because the Second Circuit decided the case on the issue of extraterritorial application, it expressed no views as to whether internal whistleblowers are protected under Dodd-Frank. Siemens, 763 F. 3d at 182-83.
63. ∗1 (S.D. Tex. June 28, 2012).
64. Id. (emphasis omitted) (citing Nollner v S. Baptist Convention, Inc., 852 F. Supp. 2d 986, 993-95 (M.D. Tenn. 2012)
65. ∗5 (S.D.N.Y. May 4, 2011)).
66. ∗4-6. The question of whether Dodd-Frank applies extraterritorially was examined recently by the Second Circuit in Liu v Siemens AG, which held that the antiretaliation protections of Dodd-Frank do not apply beyond the United States. 763 F. 3d 175, 180-81 (2d Cir. 2014).
67. Asadi v G.E. Energy (USA), L.L.C., 720 F. 3d 620, 630 (5th Cir. 2013).
68. The Fifth Circuit applies de novo review to a district court order that grants a Rule 12(b)(6) motion to dismiss for failure to state a claim "and may affirm on any basis supported by the record." Id. at 622 (citing Torch Liquidating Trust ex rel Bridge Assocs v Stockstill, 561 F. 3d 377, 384 (5th Cir. 2009)).
69. Id. (citing Carcieri v Salazar, 555 U.S. 379, 387 (2009)
70. BedRoc Ltd v United States, 541 U.S. 176, 183 (2004)
71. Robinson v Shell Oil Co., 519 U.S. 337, 341 (1997)).
72. ∗4 (D. Conn. Sept. 25, 2012)
73. Nollner v S. Baptist Convention, Inc., 852 F. Supp. 2d 986, 994 n. 9 (M.D. Tenn. 2012)
74. ∗4-5. Id. at 624 n. 6.
75. See Richard E. Moberly, Sarbanes-Oxley's Structural Model To Encourage Corporate Whistleblowers, 2006 B.Y.U. L. REV. 1107, 1151 (2006) (noting that internal whistleblowers may be less likely to experience retaliation)
76. Matt A. Vega, Beyond Incentives: Making Corporate Whistleblowing Moral in the New Era of Dodd-Frank Act "Bounty Hunting," 45 CONN. L. REV. 483, 533 (2012) (stating that leading business ethics treatises have indicated that the use of internal channels before external channels is a moral choice for a whistleblower).
77. FREDERICK D. LIPMAN, WHISTLEBLOWERS: INCENTIVES, DISINCENTIVES, AND PROTECTION STRATEGIES 57-60 (2012).
78. Oral Argument, Asadi v G.E. Energy (USA), L.L.C., 720 F. 3d 620 (5th Cir. 2013) (No. 12-20522), available at http://www.ca5.uscourts.gov/OralArgumentRecordings.aspx.
79. Asadi v G.E. Energy (USA), L.L.C., 720 F. 3d 620, 626 (5th Cir. 2013).
80. Chevron U.S.A. Inc v Natural Res. Def. Council, Inc., 467 U.S. 837, 842-43 (1984).
81. Robinson v Shell Oil Co., 519 U.S. 337, 340 (1997)
82. (quoting United States v Ron Pair Enters., Inc., 489 U.S. 235, 240 (1989)).
83. Robinson, 519 U.S. at 341 (citing Estate of Cowart v Nicklos Drilling Co., 505 U.S. 469, 477 (1992)).
84. FDA v Brown & Williamson Tobacco Corp., 529 U.S. 120, 133 (2000) (emphasis added) (internal citations omitted).
85. Asadi v G.E. Energy (USA), L.L.C., 720 F. 3d 620, 627 n. 9 (5th Cir. 2013)
86. (citing Exxon Mobil Corp v Allapattah Servs., Inc., 545 U.S. 546, 568 (2005)).
87. Oral Argument at 24:55-25:05, Asadi v G.E. Energy (USA), L.L.C., 720 F. 3d 620 (5th Cir. 2013) (No. 12-20522), available at http://www.ca5.uscourts.gov/OralArgumentRecordings.aspx.
88. ∗4 (S.D.N.Y. May 4, 2011) (noting that "[t]he legislative history of [Dodd-Frank] provides little evidence of Congress's purpose [with respect to this question]. The various committee reports and debates in Congress focus on the bounty provisions of the Act and contain very few substantive discussions of its anti-retaliation provisions. Of those few, none touch upon the issue of whether reporting to the SEC is required for whistleblowers to avail themselves of the Act's anti-retaliation provisions."). See also H.R. Res. 4173, 111th Cong. (2010) and S. REP. NO. 111-176, at 110-11 (2010), for the lack of any discussion of this issue.
89. Soon after the Fifth Circuit's decision in Asadi, multiple sources, including corporate law firms and the media, issued client alerts suggesting that the decision may prompt whistleblowers to instead report directly to the SEC. E.g., John J. Carney & Francesca M. Harker, A Shift in Whistleblower Protections: New Incentives for Employees To Report to the SEC Directly, BAKERHOSTETLER (July 30, 2013), http://www.bakerlaw.com/alerts/A-Shift-in-Whistleblower-Protections-New-Incentives-for-Employees-to-Report-to-the-SEC-Directly-7-30-2013
90. Rachel Louise Ensign & Christopher Matthews, Whistleblower Debate Emerges in Court Cases: Companies Say Protections Apply Only When Tipsters Raise Concerns with SEC, WALL ST. J. (Aug. 11, 2013, 7:56 PM), http://online.wsj.com/news/articles/SB10001424127887323446404579006720755980840.
91. See Deborah A. DeMott, The Crucial but (Potentially) Precarious Position of the Chief Compliance Officer, 8 BROOK. J. CORP. FIN. & COM. L. 56, 73-74 (2013) (noting the irony between early concerns that Dodd-Frank would undermine internal compliance and the Asadi decision, which "underscores the importance of reporting to the SEC")
92. Nicole H. Sprinzen, Asadi v G.E. Energy (USA) L.L.C.: A Case Study of the Limits of Dodd-Frank Anti-Retaliation Protections and the Impact on Corporate Compliance Objectives, 51 AM. CRIM. L. REV. 151, 191-93 (2014) (discussing Asadi's threat to compliance principles in the international corporate antibribery context).
93. See, e.g., David M. Mayer et al., Encouraging Employees To Report Unethical Conduct Internally: It Takes a Village, 121 ORG. BEHAVIOR & HUMAN DECISION PROCESSES 89, 100 (2013) (asserting that employees may be less likely to report internally due to fear of retribution from their employer and fellow employees); Moberly, supra note 47, at 44-45 (noting that various studies suggest that employees are encouraged to report when there is a strong ethical culture "and that people - not necessarily policies and codes - create and perpetuate that culture⋯. [I]ndividual players in the system, such as organizational supervisors, government administrators, and adjudicatory decision makers, impact whistleblowers as much as, if not more than, any formal legal provisions.").
94. Joel D. Hesch, Breaking the Siege: Restoring Equity and Statutory Intent to the Process of Determining Qui Tam Relator Awards Under the False Claims Act, 29 T.M. COOLEY L. REV. 217, 226 (2012) (alteration in original) (footnote omitted) (internal quotation marks omitted). Hesch continues: "In short, 'most employees will choose to "suffer in silence" in the face of wrongdoing for fear of retaliation in the form of termination and harassment.'" Id. at 227
95. Yuval Feldman & Orly Lobel, The Incentives Matrix: The Comparative Effectiveness of Rewards, Liabilities, Duties, and Protections for Reporting Illegality, 88 TEX. L. REV. 1151, 1158 (2010)).
96. See 15 U.S.C. § 78j-1(m)(4) (2012) (requiring corporations to establish procedures for employees to share confidential and anonymous information about accounting or auditing misconduct to the corporation's audit committee); Blount & Markel, supra note 56, at 1032-33 (noting that SOX contains provisions aimed at encouraging whistleblowers by protecting them from internal retaliation such as firings, suspensions, threats, and other forms of harassment); Moberly, supra note 48, at 75 (stating that several provisions of SOX are aimed at encouraging internal whistleblowers to come forward); Shannon Kay Quigley, Whistleblower Tug-of-War: Corporate Attempts To Secure Internal Reporting Procedures in the Face of External Monetary Incentives Provided by the Dodd-Frank Act, Comment, 52 SANTA CLARA L. REV. 255, 262 (2012) ("[SOX] significantly altered internal reporting mechanisms by improving the legitimacy of internal disclosures⋯.").
97. ∗14 (noting that internal compliance programs make it possible for companies to promptly address corporate misconduct).
98. Kathleen L. Casey, SEC Comm'r, Statement by SEC Commissioner: Adoption of Rules for Implementing the Whistleblower Provisions of Section 21F of the Securities Exchange Act of 1934 (May 25, 2011), available at http://www.sec.gov/news/speech/2011/spch052511klc-item2.htm.
99. Ashoke S. Talukdar, The Voice of Reason: The Corporate Compliance Officer and the Regulated Corporate Environment, 6 U.C. DAVIS BUS. L. J. 3, § 3(A)(1) (2005).
100. See, e.g., John Ashcroft et al., Whistleblowers Cash In, Unwary Corporations Pay, 40 HOFSTRA L. REV. 367, 406 (2011) (noting SOX's explicit requirement that public companies create a procedure to receive and manage reports from employee-whistleblowers)
101. Blount & Markel, supra note 56, at 1060 (highlighting that a healthy dialogue between employers and employees before a violation is reported increases the likelihood that a potential violation can be remedied before it grows into a larger problem); Lucian E. Dervan, Responding to Potential Employee Misconduct in the Age of the Whistleblower: Foreseeing and Avoiding Hidden Dangers, 3 BLOOMBERG CORP. L.J. 670, 674 (2008) (stating that internal whistleblowing makes it more likely that corporations can avoid costly litigation and take quicker, more efficient corrective action).
102. Lauren J. Resnick et al., Anyone Can Whistle, 28 CORP. COUNSELOR 1, 1 (2013)
103. see also DR. WILLIAM DE MARIA, CTR. FOR PUB. ADMIN., UNIV. OF QUEENSLAND, AUSTRALIA, COMMON LAW - COMMON MISTAKES: THE DISMAL FAILURE OF WHISTLEBLOWER LAWS IN AUSTRALIA, NEW ZEALAND, SOUTH AFRICA, IRELAND AND THE UNITED KINGDOM (Apr. 12-13, 2002) (paper presented to Int'l Whistleblowers Conference at Univ of Indiana) (noting that "[w]histleblowers, when viewed positively, are usually seen as well-meaning, ethically consistent and organizationally-focused").
104. Geoffrey Christopher Rapp, Mutiny by the Bounties? The Attempt To Reform Wall Street by the New Whistleblower Provisions of the Dodd-Frank Act, 2012 BYU L. REV. 73, 110 (2012)
105. citing Gregory Liyanarchchi & Chris Newdick, The Impact of Moral Reasoning and Retaliation on Whistle-Blowing: New Zealand Evidence, 89 J. BUS. ETHICS 37, 41 (2009), who note that individuals with higher levels of moral reasoning and behavior are more likely to blow the whistle than those with lower levels of moral reasoning).
106. Recent Legislation, Corporate Law - Securities Regulation - Congress Expands Incentives for Whistleblowers To Report Suspected Violations to the SEC - Dodd-Frank Act, Pub. L. No. 111-203, § 922, 124 Stat. 1376, 1841-49 (2010) (to be codified at 15 U.S.C. § 78U-6)
107. 124 HARV. L. REV. 1829, 1835 (2011).
108. Geoffrey Christopher Rapp, Beyond Protection: Invigorating Incentives for Sarbanes-Oxley Corporate and Securities Fraud Whistleblowers, 87 B.U. L. REV. 91, 118 (2007) ("It is difficult emotionally, personally, intellectually and professionally to come forward and blow the whistle on one's employer, colleagues and friends."
109. (quoting Pamela H. Bucy, Private Justice, 76 S. CAL. L. REV. 1, 61 (2002))).
110. Id. at 59-60. "The usual practice is to demoralize and humiliate the whistleblower, putting him or her under so much psychological stress that it becomes difficult to do a good job." Id. at 60 (quoting C. FRED ALFORD, WHISTLEBLOWERS: BROKEN LIVES AND ORGANIZATIONAL POWER 31-32 (2002)).
111. James Fanto, Whistleblowing and the Public Director: Countering Corporate Inner Circles, 83 OR. L. REV. 435, 443-44, 466-67 (2004) (discussing Irving Janis's social psychological groupthink theory as it relates to whistleblowing)
112. see also generally David B. Greenberger, Marcia P. Miceli & Debra J. Cohen, Oppositionists and Group Norms: The Reciprocal Influence of Whistle-blowers and Coworkers, 6 J. BUS. ETHICS 527 (1987). In this article, Greenberger, Miceli, and Cohen examine whistleblowing as an act of nonconformity, in which whistleblowers face rejection from conforming group members who "dislike those who deviate" and "see themselves as more similar to each other than to the deviant." Id. at 536.
113. ETHICS RES. CTR., RETALIATION: THE COST TO YOUR COMPANY AND ITS EMPLOYEES 1 (2010) [hereinafter ERC SURVEY]; see also LIPMAN, supra note 168, at 61-62 (discussing the survey).
114. See Jamie Darin Prenkert et al., Retaliatory Disclosure: When Identifying the Complainant Is an Adverse Action, 91 N.C. L. REV. 889, 928-29 (2013) (noting that those who decide to report have concluded that the potential benefits of doing so outweigh the potential costs).
115. Rapp, supra note 221, at 108; see also Umang Desai, Comment, Crying Foul: Whistleblower Provisions of the Dodd-Frank Act of 2010, 43 LOY. U. CHI. L.J. 427, 428-29 (2012) (noting that the majority of whistleblowers are employees, auditors, and regulators).
116. Feldman & Lobel, supra note 205, at 1206; see also Ellen C. Brotman & Erin C. Dougherty, Blue Collar Tactics in White Collar Cases, 35 CHAMPION 16, 17 (2011).
117. Geoffrey Christopher Rapp, False Claims, Not Securities Fraud: Towards Corporate Governance by Whistleblowers, 15 NEXUS 55, 57 (2010) (noting that whistleblowers have far better access to inside information in comparison to plaintiffs' securities lawyers who bring forth private securities litigation).
118. Rapp, supra note 221, at 108 (citing ASSOC. OF CERTIFIED FRAUD EXAM'RS, 2010 REPORT TO THE NATIONS (2010)).
119. Alexander Dyck et al., Who Blows the Whistle on Corporate Fraud?, 65 J. FIN. 2213, 2216 (2010).
120. See Norman D. Bishara, Elletta Sangrey Callahan & Terry Morehead Dworkin, The Mouth of Truth, 10 N.Y.U. J.L. & BUS. 37, 97-98 (2013) (noting the various forms of retaliation that whistleblowers may suffer, which include "ostracism, isolation, blacklisting, defamation, job stagnation, and personal consequences such as depression and family problems"); see LIPMAN, supra note 168, at 58-59; see also Fanto, supra note 232, at 441 (describing a group's "extreme negative reaction to the whistleblower" who "threatens the group's shared viewpoint and its very existence").
121. See U.S. SENTENCING GUIDELINES MANUAL § 8C2.5(f)(1) (2012) (stating that culpability is reduced in imposing a sentence if the criminal offense of the organization occurred at a time when the organization had in effect "an effective compliance and ethics program"); Id. § 8.B2.1 (proposing factors for an effective compliance and ethics program); Elletta Sangrey Callahan, Terry Morehead Dworkin, Timothy L. Fort & Cindy A. Schipani, Integrating Trends in Whistleblowing and Corporate Governance: Promoting Organizational Effectiveness, Societal Responsibility, and Employee Empowerment, 40 AM. BUS. L.J. 177, 190-91 (2002) (discussing the "carrot and stick" approach taken by the Federal Sentencing Guidelines, as the "stick" represents disincentives to misconduct in the form of monetary sanctions or penalties for organizations that make little or no effort to internally prevent wrongdoing, while the "carrot" consists of reduced fines and avoidance of sanctions for those who have attempted to thwart misconduct through internal compliance programs).
122. PAULA DESIO, U.S. SENTENCING COMMISSION, AN OVERVIEW OF THE ORGANIZATIONAL GUIDELINES, (2012), available at http://www.ussc.gov/Guidelines/Organizational-Guidelines/ORGOVERVIEW.pdf.
123. Memorandum from Mark R. Filip, Deputy Att'y Gen., to Heads of Dep't Components & U.S. Att'ys, Principles of Federal Prosecution of Business Organizations 3-4 (Aug. 28, 2008), available at http://www.justice.gov/opa/documents/corp-charging-guidelines.pdf. According to the Filip memorandum, Corporations are "legal persons," capable of suing and being sued, and capable of committing crimes. Under the doctrine of respondeat superior, a corporation may be held criminally liable for the illegal acts of its directors, officers, employees, and agents. To hold a corporation liable for these actions, the government must establish that the corporate agent's actions (i) were within the scope of his duties and (ii) were intended, at least in part, to benefit the corporation. In all cases involving wrongdoing by corporate agents, prosecutors should not limit their focus solely to individuals or the corporation, but should consider both as potential targets. Id. at 2; see also Sprinzen, supra note 203, at 156 (discussing the U.S. Department of Justice's Principles of Federal Prosecution of Business Organizations).
124. Ben Protess & Nathaniel Popper, Hazy Future for Thriving S.E.C. Whistle-Blower Effort, N.Y. TIMES (Apr. 23, 2013, 9:04 PM), http://dealbook.nytimes.com/2013/04/23/hazy-future-for-s-e-c-s-whistle-blower-office/?-r=0.
125. James A. Fanto, Surveillant and Counselor: A Reorientation in Compliance for Financial Firms, 4-8, 41-42 (Brooklyn Law Sch. Legal Studies, Research Paper No. 358), available at http://papers.ssrn.com/sol3/papers.cfm?abstract-id=2321317.