In a company with a robust compliance culture, potential
whistleblowers can express their concerns without fear of
retribution. By contrast, the penalty for a culture that silences
whistleblowers just got steeper. Companies caught punishing those
who raise red flags, especially when they turn out to be lawyers,
could be forced to confront documents otherwise inadmissible
against the company due to attorney-client privilege.
Sanford Wadler was once the General Counsel for the Northern
California-based pharmaceutical company Bio-Rad. In February 2013,
Wadler reported possible Foreign Corrupt Practices
Act violations to the company's audit committee. The report
triggered an internal investigation, a $55 million dollar
settlement with the DOJ and SEC, and, as a federal jury held
yesterday, resulted in Wadler's wrongful termination.
Magistrate Judge Spero agreed with Wadler and the
SEC, finding that, "privileged communication and
confidential information may be used, with appropriate protections,
to establish whistleblower retaliation claims under the federal
common law." As a result, Wadler was able to use sealing
orders to introduce privileged material against his former
employer, resulting in an almost $8 million victory.
As a result of this verdict, corporate counsel with compliance
concerns now have stronger protections if they are punished for
escalating their concerns. To protect the corporate privilege and
strengthen compliance norms, corporations must ensure mechanisms
for adequately responding to and protecting whistleblowers, whether
in-house lawyers or otherwise.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Attorneys from WilmerHale's Emerging Company Practice will explore the most critical issues facing entrepreneurs and early-stage companies during our QuickLaunch University Webinar Series. Over the next several weeks, we will share key takeaways from each webinar.
Lawyers are often asked to serve on Boards of nonprofit corporations and if they do so, they will often be asked by other directors about the potential individual liability of a director for actions of the nonprofit, for actions of the director and for actions of other directors. - See more at: http://www.wcsr.com/Insights/Articles/2017/March/Liability-for-Directors-of-Nonprofit-Corporations#sthash.fomRRxiJ.dpuf
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).