Use caution with collecting whistleblower documents

In many situations an employer can legally terminate a whistleblower for acquiring and disseminating confidential documents

In many situations an employer can legally terminate a whistleblower for acquiring and disseminating confidential documents

This week's question comes from Ashley G., who works in Silicon Valley and asks:

Q: “I work for a tech company in an audit and compliance role. I have observed irregularities in certain purchase orders and other documents that lead me to believe that they are making payments for items that are not being actually purchased or services not actually being received but, instead, they are paying bribes to people in foreign countries to allow products to move into, and through, the countries faster and/or without scrutiny for compliance. I have brought this up with my superiors, who have basically told me not to ask questions and just pay the invoices. Now I am getting some negatives on my performance review and I am afraid that they are going to fire me to cover this all up. I am also concerned that I may be charged with a crime or be fired for disclosing this. I have collected a lot of evidence which I keep locked in my desk. What do I do?”

A: Ashley, you have stumbled upon one of Corporate America's dirty little secrets: Bribery of foreign officials and money laundering through false invoices. This is illegal and those engaged in it can be held accountable. The conduct you reference could potentially be covered by several laws: the Foreign Corrupt Practices Act, the Sarbanes-Oxley Act and the Dodd Frank Act. But before we begin talking about those laws and how they create exceptions which may permit you to gather and disseminate evidence, let's start with the general proposition: You are not supposed to appropriate for your own use your employers' confidential, proprietary information.

Proprietary information, also known as a trade secret, is defined by California Civil Code Section 3426.1 as “information, including a formula, pattern, compilation, program, device, method, technique, or process, that: 1) Derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use; and 2) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.” Contracts and purchase orders would generally fall into this category.

As far as taking these documents to support a generalized claim that you are being wrongfully terminated, courts have consistently held that anti-retaliation statutes do not protect employees who unreasonably appropriate records without permission for the purpose of using them against the company. O'Day v. McDonnell Douglas Helicopter Co. (9th Circuit, 1996). This means that in many situations an employer can legally terminate a whistleblower for acquiring and disseminating confidential documents, even if the employee has engaged in protected activity by reporting misconduct and took the documents only to corroborate the allegations. Depending on the rationale for taking the documents, the penalties can range from having a valid lawsuit thrown out to facing criminal penalties for appropriating trade secrets under the Computer Fraud and Abuse Act, National Stolen Property Act and the Electronic Espionage Act.

Now for the exceptions: The Securities and Exchange Commission and the Department of Justice are jointly responsible for enforcing the FCPA. For FCPA purposes, the Sarbanes-Oxley Act (SOX) imposes certification and reporting requirements on issuers, which may compel a company to disclose the problematic payments. SOX requires companies to design and monitor internal controls and SOX compliance programs, including FCPA compliance. Moreover, under SOX, the company and responsible officials have to certify that all material issues, including potential FCPA and fraud issues, have been disclosed to the auditors and the board of directors. In 2011, the Administrative Review Board of the U.S. Department of Labor, in Vannoy v. Celanese Corp., found that the circumstances under which an employee had taken evidence of falsification of certain records made such collection appropriate and that the complainant had neither secured the documents in a nefarious way nor shared them with inappropriate parties.

Section 922 of the Dodd-Frank Act provides a whistleblower program that rewards individuals who assist the SEC in uncovering securities violations, including FCPA violations. The Final Rules of the SEC regarding whistleblowers makes it explicit that employees who provide stolen documents to the SEC are engaging in protected activity under Dodd-Frank. Final Rule 21F-17(a) provides: “No person may take any action to impede an individual from communicating directly with the Commission staff about a possible securities law violation, including enforcing or threatening to enforce, a confidentiality agreement … with respect to such communications.”

The FCPA, Dodd-Frank and SOX all contain anti-retaliation provisions that protect whistleblowers. This is a very treacherous area and you should consult an attorney. For more information, go to our whistleblower website,

Christopher B. Dolan is owner of the Dolan Law Firm. Email questions to

Christopher DolanFeaturesForeign Corrupt Practices ActSarbanes-Oxley ActWhistleblower

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