Maritime Law-Chasing Whistleblower Bounties

In August, I spoke to the North American Maritime Ministries Association on the topic of Legal Issues Affecting Seafarers and Ship Operators in Whistleblower Scenarios. You can read more about NAMMA here => NAMMA. Since this presentation, I have been asked to opine on other sorts of whistleblower scenarios. I recently noted that the Securities and Exchange Commission has just obtained a record $14 million whistleblower bounty for an in-house counsel whistleblower against his own company, which certainly may have some in-house counsel wondering if they should squeal on their clients.

The Corporate Counsel magazine on October 14th cites a growing number of in-house counsel and compliance officers filing whistleblower-related claims against their own companies. I find this a disturbing trend, as these cases present a host of issues not present in an ordinary whistleblower claim, such as the plaintiff’s use of privileged communications, attorney work product, and confidential client information. In my view, an in-house counsel claim leaves a company particularly vulnerable. However, it would appear that states are starting to enact ethics opinions directly addressing the growing concern.

Corporate Counsel reports that the New York County Lawyers’ Association issued an ethics opinion stating that New York in-house or outside corporate counsel cannot ethically collect whistleblower bounties for providing confidential information about their clients to the SEC. In addition, a U.S. Supreme Court case earlier this year made it harder to prove that an employee was retaliated against for whistleblowing. The ruling required a stronger showing of causation from the plaintiff.

However, I could not find any such ethics opinions issued here in Florida. If you know of one, please let me know where I can find it.

Given the current status of whistleblower law, there may appear to be a narrowing trend in the U.S. for whistleblower plaintiffs. However elsewhere, the whistleblowing concept is gaining broader ground. The Financial Times has reported that the United Kingdom, which enacted a new whistleblower law this year, is now considering whether to begin paying U.S.-style whistleblower bounties.

So for those of you overseas, you will need to watch what we do over here!

If you are interested in receiving a copy of my Powerpoint presentation to NAMMA (as it addresses some of these concepts) or are interested in contacting me, you may do by writing to me at mov@chaloslaw.com.

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