In response to the SEC’s finding of wrongdoing, the hedge fund agreed to pay $2 million in settlement costs, which includes a $300,000 penalty, along with $1.7 million in disgorgement and approximately $180,000 in interest. Under the Dodd Frank Act, the SEC awarded the whistleblower the maximum allowable percentage of the settlement amount.

The Dodd-Frank Act

The Dodd-Frank Wall Street Reform and Consumer Protection Act became law in July of 2012. The legislation was created in response to financial concerns that brought about the recession and it includes strict regulation standards on financial institutions. It also protects whistleblowers who provide the SEC with information about wrongdoing. Additionally, if the reported information leads to at least $1 million in sanctions, the whistleblower may receive compensation. Awards can range from 10% to 30% of the total sanction amount.

The Implications of the Award

The award in this case represents 30% of the settlement amount, which is the maximum allowable payment. The SEC is sending a strong message to employers that they will be held accountable for retaliation against whistleblowers. According to reports, the SEC whistleblower chief hopes that the substantial award in this case will influence other financial institution employees to report wrongdoing free from fear of retaliation by their employers.

If you have questions or concerns about whistleblower status or employer retaliation, contact our office to speak with a trained attorney.

In Smith v. Winter Place LLC, 447 Mass. 363 (August 1, 2006), the Supreme Judicial Court reversed a lower court’s grant of summary judgment finding in favor of defendant-employer and dismissing the retaliation claims of two plaintiff-employees who were terminated after they made a complaint to their manager about their employer’s violation of the tip-pooling law, 149, § 152. The Supreme Judicial Court agreed with plaintiff’s contention that the anti-retaliation provision of the Massachusetts Wage Act, located at 149, § 148A, “extends the protection of the statute to employees who are penalized for taking “any action” to seek their rights under the laws governing wages and hours.” Because the employees made an internal complaint about a violation of the wage laws to their manager, they were protected under 149, § 148A, and thus the lower court’s grant of summary judgment which effectively dismissed their retaliation claim was held improper.

It is now clear that an employee need not file a complaint with the Office of the Massachusetts Attorney General in order to receive the protections of 149, § 148A. Rather a “complaint made to an employer (or a manager of the employer) by an employee who reasonably believes that the wages he or she has been paid violate [wage] laws” is sufficient to gain the protections of the statute.

Bottom line: internal complaints of wage violations are enough to protect employees from retaliation under the Wage Act.