Whistleblowing Developments: Key Takeaways and a Look Ahead (Part 5)

In this episode of S&C’s Critical Insights, Annie Ostrager, Co-Head of S&C’s Employment Law Group, Litigation Partner Kamil Shields and Litigation Associate Sabrina Solow, underscore key takeaways from the whistleblowing series and discuss anticipated developments. They discuss how companies may respond to the different federal government whistleblower programs, as well as the shift in priorities under the current administration, including investigating federal contractors. A preview of the conversation can be found in the Q+A below. Sabrina: What are trends you’re anticipating or areas you’re watching in the whistleblowing space? Annie: One significant area of focus, where we are already seeing activity, including based on whistleblower tips, is investigations of federal contractors. Earlier this year, the administration announced its Civil Rights Fraud Initiative, the purpose of which is to “investigate and, as appropriate, pursue claims against any recipient of federal funds that knowingly violates federal civil rights laws.” The Initiative is intended to enforce policies announced in various recent Executive Orders aimed at certain forms of discrimination. Kamil: We expect that universities could be a particular area of focus as a basis of a False Claims Act action and that action could be pursued on the ground that the university is violating the DEI policies that you just discussed in these Executive Orders. While we have not yet seen… a False Claims Act enforcement action brought against a university by the Civil Rights Fraud Initiative, according to news reports, investigations by the DOJ have started based on this theory.

In this episode of S&C’s Critical Insights, Kamil Shields, a partner in S&C’s Litigation Group, Mehdi Ansari, Co-Head of the Artificial Intelligence Practice, and Litigation Associate Sabrina Solow discuss whistleblowing developments, including the proposed AI Whistleblower Protection Act. They also compare how the current and prior administrations have approached AI through executive orders, and examine recent parallel criminal and civil cases brought by the Department of Justice and Securities and Exchange Commission for alleged “AI-washing,” which refers to a company’s false or misleading statements about its use of AI and the capabilities of its AI program. A preview of the conversation can be found in the Q+A below. Sabrina: Mehdi, could you describe the recent legislation to protect AI whistleblowers and how it came about? Mehdi: Introduction of this bill comes on the heels of commentary from Senator Grassley and others expressing concern that employment and non-disclosure agreements may be stifling employees of AI companies from making protected disclosures to government regulators. … It is worth noting that current whistleblower protections under Sarbanes-Oxley and Dodd-Frank are generally tied to reporting unlawful activity. This Act would be broader, covering disclosures about risks that may not yet be illegal. Sabrina: Kamil, what would Senator Grassley’s proposed AI Whistleblower Act do?  Kamil: Importantly, unlike other regimes discussed in prior episodes, the legislation does not purport to offer the opportunity for a large monetary reward for blowing the whistle. It does, however, contain a section called “Anti-Retaliation Protection for AI Whistleblowers.” That section protects a whistleblower who provided information regarding an AI security vulnerability or conduct the whistleblower reasonably believes to be an AI security vulnerability or AI violation from a range of retaliatory conduct, including demotion, suspension, threats, harassment, or termination.

In this episode of S&C’s Critical Insights, Annie Ostrager, Co-Head of S&C’s Employment Law Group, Nic Bourtin, Head of the Criminal Defense and Investigations Group, and Litigation Associate Sabrina Solow discuss whistleblowing developments, including the DOJ Criminal Division’s Corporate Pilot Program and its recent changes under the new administration.

In this episode of S&C’s Critical Insights, Kamil Shields, a partner in S&C’s Litigation Group, Kyle Mach, a partner in S&C’s Antitrust Group, and Litigation Associate Sabrina Solow discuss the new whistleblower program established by DOJ Antitrust Division. They start off with brief background on antitrust law and then discuss the new whistleblower program and how it reflects a change in the Antitrust Division’s approach.   A preview of the conversation can be found in the Q+A below. Sabrina: Kamil, can you speak to the genesis of the Antitrust Division’s new whistleblower program and how it fits into existing DOJ Antitrust policies?  Kamil: Since the 1990s, the Antitrust Division has had a “leniency policy.” Broadly speaking, when an organization or individual is the first to report that it engaged in a criminal conspiracy, it can receive non-prosecution protection. Under the statute known as “ACPERA,” the first to report these conspiracies can also receive a variety of benefits in related civil litigation as well. The leniency policy is an important enforcement tool for the Antitrust Division. It creates a powerful incentive for companies and individuals to self-report in order to avoid or mitigate criminal prosecution and penalties. Then, on July 8, the DOJ Antitrust Division announced a partnership with the U.S. Postal Service to create a Whistleblower Rewards Program for reporting criminal offenses on “antitrust crimes and related offenses.” Under this program, whistleblowers who voluntarily provide information about antitrust offenses that result in at least a $1 million recovery may be eligible to earn a reward, which is presumptively 15-30 percent of the amount of the fine or recovery.   Sabrina: Kyle, what are the eligibility requirements of this new program? Kyle: There are a few key eligibility requirements we should touch on: (1) the tip must relate to an eligible criminal violation; (2) the whistleblower must provide original information; and (3) there must be a nexus to the U.S. Postal Service. Taking the first requirement first. The whistleblower must provide information relating to an eligible violation under this Antitrust program. It can’t be a tip on just anything.

In this episode of S&C’s Critical Insights, S&C Tax Co-Heads Isaac Wheeler and Davis Wang, along with Tax Counsel Bella Schapiro and Special Counsel Aharon Friedman, continue their discussion on The One Big Beautiful Bill Act. They dive into the policy debates driving the OBBBA changes to green energy and international tax, highlighting opportunities and challenges for taxpayers. They also set out areas that will be a priority for guidance by the Treasury Department and the IRS.  A preview of the conversation can be found in the Q+A below. Isaac: Let’s talk a little bit about green energy and the IRA. I was hearing that some rollback of the IRA was happening, but that the more established technologies like wind and solar should be largely safe, but it’s almost like the opposite happened. Aharon, did something change as part of the negotiations of the bill? Aharon: I think there’s an underlying current amongst Republicans as to wind and solar subsidies needing to be done with. For decades, these industries told Republicans that they need temporary incentives in order to get them off the ground, but at some point in time they would be able to be sufficient on their own and compete in the marketplace. This conversation has been going on for 20 years and I think Republicans started asking more questions as well and just thought it was time to start cutting it off. I also think from a policy perspective, there have been more questions asked on the Republican side of the aisle with regard to how solar and wind, because they’re temporary, affect the grid. Isaac: Let’s move on to regulatory guidance because a big part of what now tax policy moves towards is what do the regulations look like that are interpreting the bills. Bella, do you want to discuss this?  Bella: There’s over 60 calls for regulations by the Treasury for this bill. Some of it is to explain and provide details or rules and some of it is to make the mechanics work. And even beyond those that are specifically authorized in the tax, there are other provisions that will require Treasury to provide guidance and explanations to taxpayers about. So I think it will be interesting to see what they prioritize, what comes out first of how various provisions are interpreted, particularly given the lack of legislative history.

In this episode of S&C’s Critical Insights, S&C Tax Co-Heads Isaac Wheeler and Davis Wang, along with Tax Counsel Bella Schapiro and Special Counsel Aharon Friedman, discuss the background, process and tax implications of The One Big Beautiful Bill Act.  A preview of the conversation can be found in the Q+A below. Isaac: Aharon, was there anything interesting about the timing of The One Big Beautiful Bill, maybe relative to other reconciliation bills? Aharon: I think a good comparison to this bill is the Tax Cuts and Jobs Act or TCJA, which wasn’t signed until December 22, 2017, and I think that relates to a lot of the fundamental differences between the TCJA and the OBBBA. I think a real difference in the process in 2017 was that the bill followed more of a “respecting congressional traditions” with regards to how markups are conducted and how legislation moves. Another key difference was that the Senate Finance Committee actually held the markup in 2017.  They didn’t hold the markup this time around. Also in 2017, there was a formal Conference Committee, which has become increasingly rare in recent decades. This time around the House passed the bill. Isaac: Davis, do you want to discuss “carried interest”? Davis: I don’t think that people thought that there was a need to have this in the legislation. On the other hand, on the campaign trail, President Trump had said that he was inclined to repeal the exception that carried interest had enjoyed.  So, there was always this question of whether carried interest should in fact come back into play. But again, to the surprise of many, not only did it not make it into the legislation, it never touched any of the iterations of the legislation. It was not in the House bill or the Senate bill.

In this episode of S&C’s Critical Insights, Annie Ostrager, Co-Head of S&C’s Employment Law Group, Litigation Partner Kamil Shields and Litigation Associate Sabrina Solow, discuss a range of whistleblowing developments. They touch on the recent downward trend in SEC whistleblowing enforcement and contrast that against the opposite trend under other programs, in part driven by a growing focus on whistleblowers as a potential means of pursuing investigative priorities. A preview of the conversation can be found in the Q+A below. Sabrina: Kamil, can you start us off with brief background? Kamil: In the U.S., there are a variety of avenues for a whistleblower to consider.  For example, the SEC, Federal Reserve, CFTC, and a provision of the False Claims Act have long provided an avenue for whistleblowers to come forward. More recently, DOJ Criminal and DOJ Antitrust have developed respective whistleblowing programs. Sabrina: We’ve been seeing an incredible amount of coverage on whistleblowing cases, regimes, and proposed legislation.  But against this background of heightened attention to whistleblower activities, we are seeing a downturn in SEC awards.  Annie, can you give some background? Annie: As reported in the past couple of weeks, the SEC has denied over 30 consecutive awards this year between late-April and mid-July. In fact, only about $20 million has been awarded this year.  Although we’re only a little more than halfway through the year, that is a drop in the bucket compared to last year, when the agency awarded over $255 million to 47 individual whistleblowers. This may reflect a change in approach and priorities at the SEC. For example, under the last administration we saw a significant uptick in SEC enforcement actions related to the SEC whistleblower protection rule, Rule 21F-17. Under the current administration, however, we have not seen any SEC whistleblower rule enforcement actions to date.

In this episode of S&C’s Critical Insights, Eric Kadel and Sharon Cohen Levin, Co-Heads of S&C’s National Security Practice, Tom White, Co-Head of the Firm’s International Arbitration and Global Dispute Resolution Practice, and Litigation Special Counsel Andrew DeFilippis, provide an overview on supply chain enforcement and compliance. They explore key enforcement risks stemming from recent tariffs and discuss the potential for civil litigation under the False Claims Act. A preview of the conversation can be found in the Q+A below. Andrew: Customs fraud and tariff evasion are now listed as the Department’s second-highest white-collar criminal enforcement priority. What does that signal about how the government is approaching these issues today? Sharon: It’s a fundamental shift. For years, customs-related violations were typically addressed as regulatory infractions, or occasionally, in egregious cases as criminal prosecutions involving false statements, conspiracy to defraud the government, or smuggling. Those violations didn’t even make the list of priorities. But the posture today is markedly different. DOJ has identified customs and tariffs fraud as a top corporate criminal enforcement priority, signaling a shift for companies with global supply chains. Andrew: What makes the FCA such a powerful statute in the trade context? Tom: The False Claims Act is fundamentally about ensuring the government receives what it's owed. One thing that makes it so potent, especially in the trade space, is the low standard for triggering liability. The FCA doesn’t require proof of specific intent to defraud. Instead, companies can be held liable if they submit false information “knowingly”—which includes acting in reckless disregard or deliberate ignorance of the truth. That’s a lower threshold than what’s required for criminal prosecution under criminal smuggling or IEEPA’s criminal provisions.

In this episode of S&C’s Critical Insights, Annie Ostrager, Co-Head of S&C’s Employment Law Group, and Litigation Partner Kamil Shields, discuss recent developments in False Claims Act (FCA) cases, especially in light of the current Administration’s focus. Annie and Kamil provide background on the FCA and explain its role in investigations of and actions focused on alleged fraud in connection with government programs. They also cover recent notable settlements, with recoveries amounting to hundreds of millions of dollars. They also delve into Executive Order 14173, which has implications for the use of the FCA, focusing on antidiscrimination laws. The discussion includes recent court actions and the administration’s emphasis on investigating and penalizing illegal DEI practices in the private sector.  To learn more about risks and opportunities under the FCA in the new tariff environment, read Partner Thomas White and Special Counsel Andrew DeFilippis’ article in Bloomberg Law “New Tariff Environment Poses Big Risk and Opportunity Under FCA.”

In this episode of S&C’s Critical Insights, Annie Ostrager, Co-Head of S&C’s Employment Law Group, Alex Gross, a partner in the Firm’s Litigation Group, and associate Sabrina Solow explore strategic considerations for a company involved in a trade secrets case. Topics include the role of injunctive relief, the impact of mandatory disclosure regimes and related internal investigations