The financial industry can be a hotbed of fraud and other illegal activity. For decades, financial professionals who spoke out could only do so at considerable risk to their careers. However, over the past two decades, whistleblower protection laws in the financial sector have evolved significantly, often in response to major financial crises and scandals.

Despite these legal protections, coming forward as a whistleblower carries significant professional risk. Retaliation can take many forms and may include demotion, a hostile work environment, professional isolation, being “blacklisted,” or even termination. Fortunately, you do not need to navigate this path alone. The whistleblower protection attorneys at Madsen, Prestley & Parenteau, LLC, have extensive experience representing financial professionals in whistleblower cases. We are committed to helping people protect their livelihood through negotiation and, when necessary, litigation.

What Protections Are Available to Whistleblowers in the Financial Sector?

Whistleblowers are individuals who report illegal conduct by a business, organization, government agency, or government official. Unfortunately, some employers respond to whistleblowers by punishing them. They may disguise retaliation as “restructuring” or identify sudden “performance issues.” However, various laws protect whistleblowers who come forward to call out fraud and other unlawful conduct.

Dodd-Frank

The Dodd-Frank Wall Street Reform and Consumer Protection Act protects whistleblowers who provide information to the Securities and Exchange Commission (SEC) regarding any potential violation of U.S. Securities laws. Employers are prohibited from engaging in any retaliatory action against a whistleblower, including discharge, demotion, suspension, threats, harassment, or other forms of discrimination.

Dodd-Frank only protects whistleblowers if the violation falls under the jurisdiction of the Securities and Exchange Commission (SEC), which investigates claims of accounting fraud, false information, insider trading, and other violations of securities laws.

Sarbanes-Oxley

The Sarbanes-Oxley Act (“SOX”) protects employees of public companies who provide information or otherwise assist in the investigation of allegations of mail fraud, wire fraud, bank fraud, securities fraud, any rule or regulation of the Securities and Exchange Commission, or any federal law that relates to fraud against shareholders.

To be protected, the employee must provide information or assistance to a federal law enforcement agency, a member or committee of Congress, or an individual with supervisory authority over the employee. So, importantly, unlike Dodd-Frank, Sarbanes-Oxley protects employees who blow the whistle internally within the company, even if the employee does not blow the whistle to the government. The employee is not required to demonstrate that a violation has actually occurred. Rather, to be protected, the employee must demonstrate that they “reasonably believe” a violation is occurring.

There is a Connecticut law, Section 33-1336 of the Connecticut General Statutes, which provides similar protections for employees of publicly traded companies and creates a right for employees who have been subjected to retaliation to file lawsuits in Court.

False Claims Act

The False Claims Act (“FCA”) protects individuals who were discharged, demoted, suspended, threatened, harassed, or discriminated against in any other way because of actions taken to stop violations of the FCA. The FCA targets attempts to defraud the federal government through healthcare fraud, defense contractor fraud, grant fraud, cybersecurity fraud, and tax fraud.

Anti-Money Laundering Act (AMLA)

Under the AMLA, employers are prohibited from discharging, demoting, threatening, or harassing employees who provide information relating to money laundering or violations of the Bank Secrecy Act to the attorney general, secretary of the treasury, or other federal regulators. The act applies to a range of financial institutions, including banks, broker-dealers, insurance companies, operators of credit card systems, mutual funds, certain casinos, and travel agencies, among others.

Bank Secrecy Act

The Bank Secrecy Act prohibits financial institutions from discharging or otherwise retaliating against an employee for providing information to any federal supervisory agency concerning a possible violation of the law by a financial institution or its directors, officers, or other employees.

Federal Department of Insurance Act (FDIA)

The Federal Department of Insurance Act prohibits federal banking agencies, federal home loan banks, and federal reserve banks from discharging or otherwise discriminating against an employee because they provided information to any federal investigative agency or the Attorney General regarding any possible violation of any law or regulation, gross mismanagement, a gross waste of funds, an abuse of authority, or a substantial and specific danger to public health or safety.

Connecticut Laws Providing Additional Protection

In addition to those federal laws, Connecticut laws provides additional protections for financial professionals who report or oppose wrongdoing.

Section 31-51q of the Connecticut General Statutes prohibits retaliation against employees who engage in speech on matters of public concern that is protected by the First Amendment, or the free speech provisions of the Connecticut Constitution. Opposition to unlawful activities in the workplace, such as fraud or breaching fiduciary duties to clients and investors, can be protected speech under that statute. Even if an employee is speaking pursuant to their official job duties, this statute prohibits retaliation against them if the speech relates to serious wrongdoing, intentional dishonesty, threats to health and safety, and deliberately unconstitutional conduct. When a financial professional opposes or reports violations of law, unethical behavior that runs afoul of legally mandated codes of ethics, or other similar activities, it will often be protected as opposition to serious wrongdoing or intentional dishonesty.

Section 31-51m of the Connecticut General Statutes prohibits retaliation against employees who report violations of law or suspected violations of law to public agencies. So, if a financial professional reports a suspected violation of law to an agency such as the Securities and Exchange Commission, a federal or state taxing agency, or a banking regulatory, or other similar governmental agency, this statute would prohibit retaliation against them for that activity.

Deadlines, Procedures, and Remedies Vary

These various statutes which provide protection for employees, including financial professionals, provide for various statute of limitations deadlines, filing procedures, and available remedies. For instance, some of these statutes require that claims be filed within 90 or 180 days of the retaliation, while others allow for up to 3 years to file claims. Some of these laws require that claims be filed with administrative agencies, such as OSHA, while others allow for lawsuits to be filed directly in court. These various statutes also allow for the recovery of different types of damages – with some allowing for double damages and others allowing for punitive damages.

So, in this complex area of the law, it is critical that employees get advice from employment attorneys who have experience representing whistleblowers who have faced retaliation for doing the right thing in order to ensure that their rights are protected.

Whistleblower Protection for Financial Professionals

Financial professionals who report their employer’s illegal conduct are protected under various federal laws. If you reported your employer’s illegal conduct and were subjected to an adverse employment action, you may have a legal claim. Our attorneys can help you navigate this complex area of the law and provide you with legal advice to ensure that your legal rights are protected.