Protecting Non-US Whistleblowers from Retaliation

Corporate Secretary
August 20, 2014

Jordan A. Thomas raises concern for multinational companies attempting to implement uniform compliance and ethics policies

Last week, a federal appellate court dismissed an appeal of the New York Southern District Court's ruling in Liu Meng-Lin v Siemens last October, saying that Dodd-Frank's anti-retaliation protections cannot be applied extra-territorially for activity that occurred outside the US in a non-US company.

'I'm not sure this is good for corporations. Essentially, corporations won the battle but may actually lose a more important war,' says Jordan Thomas, a partner and chair of the whistleblower representation practice at Labaton Sucharow, who's also a former assistant director of the SEC. Thomas believes more knowledgeable employees 'will choose to report externally and anonymously to the SEC and other law enforcement organizations as a result of this decision.'

'Then an international whistleblower is almost forced, if they're concerned about retaliation and blacklisting, to report externally and anonymously because that's the best protection against retaliation and blacklisting,' says Thomas.

'I do think sophisticated organizations should look at different ways to incentivize people into coming forward,' Thomas says. 'Why not experiment with small monetary awards? It makes sense.' While some organizations are troubled by the idea of employees being paid to do what they should be doing in the course of doing their jobs, 'more sophisticated organizations focus on results. How do we get people to do what we want and we want people to tell about bad things going on in their midst,' he adds.