June 10, 2011

The SEC’s New Whistleblower Rules: Should You Amend Your Whistleblower Policy?

In the wake of the SEC’s new whistleblower rules, we are posting dozens of memos analyzing them in our “Whistleblowers” Practice Area. We also are addressing some questions on the new rules in our “Q&A Forum,” including this one:

Question #6531: As a result of the SEC adopting final rules implementing the whistleblower provisions of Dodd-Frank, does anyone find it necessary or prudent to amend an issuer’s Whistleblower Policy accordingly? Because the final rules will not be effective until probably later this summer, figure it isn’t too early to start thinking about this.

Steve Pearlman of Seyfarth Shaw noted: I’m not aware of any publicly available. But my knee-jerk is that the potential down-sides of amending a whistleblower policy to take changes in the legal landscape into consideration are not readily apparent and likely well outweighed by the advantages. For example, it generally would be unreasonable for an employee to argue that a change in the policy amounts to an admission that the prior policy was ineffective or not legally sufficient and thus yields liability. Plus, it is worth noting that subsequent remedial measures generally are not appropriate evidence of liability.

Caveat: any revision to the policy needs to be carefully crafted so that it does not inadvertently invite or condone any sort of retaliation or otherwise run afoul of the new law (or any other laws for that matter).

By the way, you may want to see Keith Bishop’s blog entitled “SEC’s Whistleblower Release Misapprehends California Ethics Laws And Rules” – and this recent memo analyzing the latest Sarbanes-Oxley whistleblower case.

Which In-House Department Should Handle Whistleblower Complaints?

In this podcast, Steve Pearlman of Seyfarth Shaw describes how companies are grabbling with who handles whistleblower complaints under the new Dodd-Frank framework adopted recently by the SEC, including:

– Historically, which departments within a company handled whistleblower complaints?
– Is that changing and how?
– Can you give a specific example of how a company may create a hybrid model involving multiple departments?
– What factors should companies consider to determine what is the best model for them?

Delaware: Strine Nominated as New Chancellor; Glasscock as New Vice Chancellor

Yesterday’s breaking news that I blogged on the Blog: Delaware Chancery Court VC Leo Strine tapped as the new Chancellor and Sam Glasscock, a long-time court master, nominated for Strine’s VC slot. They now need to be confirmed by the Delaware State Senate. Here’s articles from:

Delaware Online


WSJ Law Blog

NY Times Dealbook

– Broc Romanek