News that Wells Fargo opened more than two million unauthorized deposit and credit card accounts has filled the headlines over the past few months. While There is no question that the customers were harmed by the bank's unlawful sales practices, other victims have had their lives and livelihoods turned upside down in the scandal - innocent Wells Fargo workers who claim the bank used regulatory filings and other tactics as retaliation, jeopardizing their careers.
Stories of corporate greed, cover-ups, and corruption make headlines nearly every day. Scandals at Enron, AIG, Madoff Securities, and elsewhere rocked the investment world to the point that we almost take such violations in stride. What we shouldn't take for granted, however, is the critical role of the courageous whistleblower who exposes the wrongdoing, often at great personal risk.
President Obama has now signed into law the Defend Trade Secrets Act (DTSA), which takes effect immediately and represents a significant change in the way trade secret disputes are likely to be resolved in the United States. The law also extends new whistleblower protections to employees.
When Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank") in 2010, it included new protections for whistleblowers who spoke up about securities laws violations. Despite Congress's clear intent to shield whistleblowers from retaliation, courts have been divided over just who qualifies as a "whistleblower."
Upholding a jury verdict in favor of a former U.S. Bancorp certified financial planner, the Sixth Circuit adopts the majority rule under the Sarbanes-Oxley Act (SOX) that - for a retaliation claim - employees need only show that they had an objectively reasonable belief, based on a totality of the circumstances, that they were reporting actionable fraud to a supervisor under § 1514A(a)(1). The panel rejects a standard, previously adopted in a nonprecedential opinion, that the employee's complaint "must definitively and specifically relate to one of the six enumerated categories" of fraud by "approximat[ing] the basic elements" of the fraud claim.