SEC FOIA Documents Reveal Big Law Defense Firms are Confidentially Representing Dodd-Frank Whistleblowers

By Corruption Buzz On Sep 26, 2022

Documents obtained under the Freedom of Information Act (FOIA) from the U.S. Securities and Exchange Commission (SEC) reveal that large “Big Law” corporate law firms are confidentially or quietly representing whistleblowers in whistleblower reward cases filed under the highly successful Dodd-Frank Act. Leading corporate firms, such as Winston & Strawn and Akin Gump, have already obtained whistleblower reward judgments in claims filed against corporate criminals.

“The revelation that the most notorious anti-whistleblower law firms are quietly representing whistleblowers in SEC enforcement cases came as a shock,” said Stephen M. Kohn. Kohn is a whistleblower attorney who filed the FOIA request on behalf of Whistleblower Network News (WNN) and the National Whistleblower Center (NWC). “The potential for massive conflicts of interest is obvious,” Kohn said, “as these firms base their practices on defending corporations accused by whistleblowers of engaging in bribery, money laundering, and securities frauds.”

WNN reviewed the websites of the large corporate firms that successfully represented whistleblowers who reported significant securities law violations under Dodd-Frank. Neither of the two largest firms took credit for winning a Dodd-Frank whistleblower case, or disclosed that they were representing whistleblowers in SEC investigative proceedings.

WNN reviewed the 1034 pages of FOIA documents released by the SEC and carefully compiled a list of the 64 law firms that successfully obtained a reward on behalf of a whistleblower. Among those firms were six that primarily represent corporations and individuals accused of corporate crimes.

“The SEC did a significant public service by making these disclosures,” said Siri Nelson, the Executive Director of the NWC. “Whistleblowers need to know that corporate firms that make millions of dollars by defending corporate criminals are also trying to represent them. Whistleblowers’ interests may conflict with big law’s major client base. It appears as if some of the defense firms have tried to take advantage of Dodd-Frank’s confidentiality rules in order to hide their representation of whistleblowers from their corporate clients. I hope this is not the case,” Nelson said.

The number of defense firms now representing whistleblowers may be significantly larger than the six firms identified in the SEC FOIA documents. The vast majority of Dodd-Frank cases are still under review by the SEC, and the corporate defense firms involved in those cases were not revealed in the FOIA responses. “This is the tip of the iceberg. Given the long delays in resolving a whistleblower claim, which can often take at least five or more years, there are most likely hundreds of pending whistleblower cases where large defense firms have filed confidential claims,” Kohn said.

All of the cases handled by the corporate defense firms resulted in significant sanctions leveled against companies or individuals who violated the Securities and Exchange Act. The Dodd-Frank Act only permits a reward to be paid if sanctions ordered to be paid exceed $1 million.

“It is hard to understand how a corporate defense firm can have ‘undivided loyalty’ to whistleblowers who disclose large corporate frauds. When a whistleblower files a case, it is often impossible to determine how far the frauds may go and what companies may be involved in a conspiracy. Whistleblowers need lawyers who do not fear following the facts wherever they may lead,” Kohn said.

“Whistleblowers are a unique and delicate type of client. Their identities, jobs, livelihoods, and safety are all at risk with each passing minute they pursue a case. When represented by a firm that historically protects big businesses and corporations involved in fraud, whistleblowers may be in for a very bad ride,” Nelson added.

The Defense Firms

The SEC documents identified the following defense firms as having obtained monetary rewards on behalf of whistleblowers who filed cases under the Dodd-Frank Act:

Winston & Strawn, LLP: One Big Law defense firm that successfully represented a whistleblower was Winston & Strawn. Winston & Strawn prides itself in defending corporations and White-Collar criminals in “whistleblower and qui tam” cases: “We defend companies and individuals in SEC enforcement and regulatory matters related to allegations involving securities fraud, insider trading, financial disclosure failures, and market manipulation.” The firm boasted that it has “defended hundreds of employers in litigation filed by” employees, “including those involving whistleblower claims” and that it’s “team represents banks, funds, investment advisers, broker-dealers, insurers, servicers, and credit card companies in a range of regulatory compliance and enforcement matters… including government and whistleblower actions.”

The attorney who represented the whistleblower did not publicize his success in obtaining a $2.2 million award for a whistleblower. His website does mention other clients. These include a former partner in the disgraced auditing firm of Arthur Anderson (the firm that played a key role in the ENRON scandal), Deutsche Bank, and the Chief Financial Officer of the NRA.

Winston & Strawn’s whistleblower client obtained a $2.2 million reward.

Akin Gump Stauss Hauer & Feld LLP: Akin Gump describes its practice as being pro-defense: “We routinely represent clients—including companies and individuals based in the United States and around the world—in investigations conducted by the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), self-regulatory organizations such as the Financial Industry Regulatory Authority (FINRA) and state regulators.” Akin’s website did not mention its successful representation of a whistleblower in a securities fraud case.

Akin Gump’s whistleblower client obtained a $800,000 award.

Haynes and Boone, LLP: The 600-lawyer firm of Haynes and Boone does not hide the fact that it represents “employers” in lawsuits against whistleblowers: “We have represented employers and tried cases in state and federal courts involving a broad spectrum of employment-related issues, including . . . alleged unlawful discrimination in termination . . . retaliation . . . whistle blowing . . . and other work-related tort claims.” They represent more than 40 public companies ranging in size from small cap companies to large cap multi-national business entities” and “clients traded on all of the major U.S. securities exchanges . . . [and] many foreign markets.”

Haynes and Boone’s whistleblower client obtained an award for 20% of the sanctions collected by the SEC.

Levine Lee LLP: Levine Lee markets itself as an experienced firm representing clients accused of violating anti-fraud laws. As the firm’s website explains, their lawyers “have represented clients in matters initiated by the Department of Justice, the Securities and Exchange Commission, the Financial Industry Regulatory Authority . . . and local prosecuting authorities. Our areas of expertise include investigations relating to compliance with the securities laws and regulations, accounting fraud, insider trading, mail and wire fraud, the Foreign Corrupt Practices Act, compliance with the Bank Secrecy Act and anti-money laundering requirements, international regulatory issues, and public corruption.”

Levine Lee’s whistleblower client obtained a $10 million award.

Leader Berkon Colao & Silverstein LLP: Their website describes their corporate practices as “representing public and private companies, officers, directors, senior management, broker/dealers and traders in securities class actions . . . market manipulation . . . and other investment-related litigation. . . [The firm] has broad experience representing hedge fund and private equity firms in a variety of disputes . . .”

In separate cases, Leader & Berkon’s whistleblower clients obtained $15 million and $27 million awards.

Sallah Astarita & Cox, LLC: Sallah Astarita & Cox “regularly represents financial institutions, broker-dealers, financial advisors, investor relations firms, insurance agents, and other clients . . . in matters arising from allegations of fraud, breach of fiduciary duty, failure to supervise, accounting misconduct, and negligence.” The firm’s website also explained that it has “defended” “corporate officers” “before securities regulators.”

Sallah Astarita & Cox’s whistleblower client obtained a $1.8 million award.

The FOIA Request

WNN’s investigation into the law firms that have successfully represented whistleblowers under Dodd-Frank was initiated after Bloomberg Law and Professor Alexander Platt from the University of Kansas obtained the names of all the law firms that had prevailed in SEC whistleblower cases. Bloomberg and Professor Platt published articles discussing the FOIA materials, but did not mention the fact that six traditional defense firms had represented whistleblowers and obtained over $56 million in whistleblower rewards.

The FOIA documents paint a picture of a whistleblower program that is open to all legitimate whistleblowers. Over 50 pro se whistleblowers won cases on their own behalf, a majority of the firms that have prevailed in whistleblower cases had no inside connections with the SEC (and did not employ former SEC lawyers), and the Commission was equally open to obtaining information from both defense and pro-whistleblower lawyers. The SEC did not shield the identity of any lawyers who successfully practiced before the Commission.

“The SEC’s whistleblower program is highly professional. The FOIA documents demonstrate that there is no favoritism in the administration of the whistleblower investigations. All whistleblowers with valuable information on securities law violations should take advantage of this highly effective program,” said NWC Executive Director Siri Nelson.

SEC FOIA Documents Reveal Big Law Defense Firms are Confidentially Representing Dodd-Frank Whistleblowers

The Defense Firms

The FOIA Request

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