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Consumer Financial Product Whistleblower Complaints Up Dramatically, SOX Complaints (with OSHA) Down

Since the enactment of Dodd-Frank in 2010, the number of whistleblower complaints filed under the Consumer Financial Protection Act (“CFPA”) has risen significantly while the number of SOX complaints filed with OSHA has largely declined.  According to data provided by OSHA, the total number of whistleblower complaints has generally increased over the past ten years.  This overall trend is not surprising in light of the greater publicity around whistleblowers in the wake of the passage of Dodd-Frank, employee-favorable rulings by the DOL, and pro-employee rulings by many courts.

Consumer Financial Protection Act

In addition to the anti-retaliation provision included in its whistleblower bounty program, Dodd-Frank established anti-retaliation protection under the CFPA in connection with the reporting of information to the Bureau of Consumer Financial Protection (“CFPB”).  Under the CFPA anti-retaliation provision, employees in the consumer financial product and service industries are protected from retaliation for reporting violations of the CFPA, regulations issued by the CFPB, or any other provision of law that is subject to the jurisdiction of the CFPB.  CFPA whistleblowers must file retaliation complaints directly with OSHA.

Since the enactment of the CFPA in 2010, the number of whistleblower complaints to OSHA under the statute has increased, particularly over the last two years.  While there were only six complaints under the CFPA in 2011, there were 14 in 2012, 28 in 2013 and 47 in 2014.

The recent increase in complaints under the CFPA are likely attributable to the fact that, although the CFPB was established in 2010, due to controversy surrounding the agency’s inception, it did not issue regulations until early 2013.  Also, OSHA only recently released  regulations implementing the whistleblower protection provision of the CFPA that establish the timing and processes for handling CFPA whistleblower complaints, including the procedures for filing a complaint with OSHA, OSHA’s investigation of the complaint, issuance of a decision and order, and appeals.

As we explained in our previous post discussing the OSHA interim regulations, OSHA explicitly adopted the “reasonable belief” definition set forth by the DOL’s Administrative Review Board in the SOX anti-retaliation context as the appropriate standard under the CFPA.  Because the Dodd-Frank regulations proposed by OSHA were similar to administrative procedures governing SOX (which are also administered by OSHA), we noted that whistleblowers would likely find OSHA to be an attractive venue for their claims, especially in light of  the relaxed pleading standard and broad interpretations of the scope of “protected activity” adopted by the DOL.  Accordingly, we can expect that the number of CFPA whistleblower complaints to OSHA will continue to rise.

SOX Claims

On the other hand, the number of SOX complaints filed with OSHA has steadily declined since 2010 (when Dodd-Frank was enacted).  In 2009, there were 228 SOX complaints filed with OSHA but that number decreased to 201 in 2010, 148 in 2011, 169 in 2012, and 145 in 2014.  This is surprising given the amount of attention garnered by finance-related whistleblowing during this period.

The decline in OSHA filings may be related to the view by some that Dodd-Frank essentially permits the assertion of a SOX whistleblower claim in federal court without first going to OSHA.  While there is a split in authority as to whether Dodd-Frank covers internal reporting protected by SOX in addition to reports to the SEC, a number of whistleblowers have proceeded under the assumption that they may assert SOX whistleblower claims in federal court in the first instance.  Indeed, in 2013 and 2014, there were numerous decisions from various federal courts, including the Southern District of New YorkEastern District of WisconsinNorthern District of CaliforniaMiddle District of Florida and the Fifth Circuit addressing whether what is essentially a SOX claim can be brought directly in federal court.

© 2022 Proskauer Rose LLP. National Law Review, Volume V, Number 7

About this Author

Lloyd B Chinn, Financial, Whistleblower Attorney, Proskauer Law Firm

Lloyd B. Chinn is a Partner in the Labor & Employment Law Department and co-head of the Whistleblowing & Retaliation Group. He litigates employment disputes of all types before federal and state courts, arbitration tribunals (e.g., FINRA, JAMS and AAA), and before administrative agencies in New York and across the country. Lloyd's practice ranges from litigating compensation disputes to defending whistleblower, discrimination and sexual harassment claims. Although he represents employers in a wide range of industries, including law, insurance, health care, consulting, media,...

Noa M Baddish, Labor and Employment Attorney, Proskauer Law Firm

Noa M. Baddish is an Associate in the Labor & Employment Department, resident in the New York office. She is a member of the Employment Litigation & Arbitration, Class and Collective, Employment Law Counseling & Training, and Whistleblower & Retaliation Groups.