A couple of recent whistleblower cases that have received national attention show the large divide that still exists in the way that these cases can progress. The first case saw the SEC award a whistleblower $400,000 for delivering information about his company’s wrongdoing that he had originally tried to report internally before being ignored by company higher-ups. In the second case, L-3 Communications Holdings fired four workers after it was forced to restate its earnings, which cost the company over a whopping $1 billion in market value. It did so as a response to employee allegations of wrongdoing within the company.
Many experts are saying that these two cases show an outstanding demonstration of the right and wrong ways to respond to allegations of company wrongdoing made by employees.
The first case was particularly interesting. The SEC was not required to provide a reward to the whistleblower, but some believe that it did so to deliver a powerful message to companies about the importance of taking complaints of wrongdoing seriously within their organization. In the past, the SEC has been criticized for telling employees to come to the agency with allegations before making the reports internally, but this award acts as a way for the SEC to show that people are still making internal reports but being ignored.
Despite the major hit to L-3 Communications Holdings, the organization responded the way publicly traded companies must when such allegations arise. While there were negative consequences for the short-term, the organization is much better off in the long run for using appropriate conduct in a whistleblower situation.
While both cases had very different results, they each show the importance of speaking up if you believe that your company is engaging in wrongdoing. Speak with a Dallas lawyer if you are aware of wrongdoing in your company and you are in need of protection before acting as a whistleblower.
