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Whistleblower Intervention

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With the enactment of the Dodd-Frank Act, Congress took a step beyond protecting whistleblowers who uncover and report unlawful conduct to appropriate government agencies. The Act requires the Securities and Exchange Commission and the Commodities Futures Trading Commission to make awards to individuals who provide original information which results in a recovery by the agency in excess of $1 million. This has created a new breed of whistleblower: one incentivized by the profit motive. 

The Act also protects whistleblowers by empowering them to sue in federal court if they are the subject of reprisals and by avoiding pre-dispute arbitration and confidentiality agreements.  Consequently, if the company engages in reprisals against a whistleblower, the stage is set for the controversy to escalate.   

When management first learns a whistleblower claims the company is engaging in violations of the securities acts, it often reacts by circling the wagons and punishing the whistleblower. It is not unusual for the intensity of the reprisal to correlate to the degree of misconduct disclosed by the whistleblower: the more stunning the disclosure, the greater the reprisal. In a sense, the reaction of management merely reflects human nature: sudden and unexpected news that corporate colleagues are violating the law, and thus the company is violating the law, triggers denial and then anger. The anger expresses itself as an attack on the whistleblower. This sets the stage for a minor securities violation to escalate into a crisis. The same process occurs when the management of government agencies discovers a whistleblower in its midst. The photos at the top of this page—government officials pulled into Congress to defend their conduct—well-illustrates this process. It all began when SEC officials blocked the testimony of a prominent Wall Street banker and then punished the whistleblower for questioning their decision.

The risk that a whistleblower complaint may escalate to corporate or agency scandal has grown exponentially over the past decade. Two factors have converged to enhance the risk posed by whistleblowers. First, Congress and state legislatures have chosen the whistleblower option as a mechanism to uncover and thus contain illegal corporate conduct and government waste, fraud and abuse of authority. Second, the whistleblower’s voice has been amplified by social media. Since both of these factors have an upward trend, the risk whistleblowers pose to businesses and government agencies will continue to grow in the future. 

Aguirre Law brings a different approach in intervening in whistleblower crises. Mr. Aguirre understands whistleblowers’ motivations in these circumstances because he was one himself and has represented high visibility whistleblowers within Fortune 500 companies and federal agencies. He also understands the motivations which drive the different types of whistleblowers. He knows the importance of responding quickly and credibly to whistleblower complaints, assessing the whistleblower’s motivations, identifying claims which involve serious allegations of unlawful conduct, and diffusing the controversy before it escalates into a full blown crisis.   

Mr. Aguirre primarily assists clients throughout California including San Diego, Santa Clara, San Francisco, Fresno, Sacramento, Los Angeles, Alameda, Kern and Orange Counties with investor and whistleblower claims involving banks, hedge funds, mutual funds, private equity funds, brokers, and other financial institutions. He focuses on claims arising out of market abuse (e.g., market manipulation, high frequency trading, insider trading, naked shorting), investment fraud, bribes to foreign officials under the Foreign Corrupt Practices Act (FCPA) and the filing of false claims under federal or California law (qui tam statutes). Mr. Aguirre may represent individuals and institutions pro hac vice (in a particular case) in most states, but must first obtain the approval of the forum court, which has been routinely granted in the past. He will also assist individuals from any state or country who seek an award from the Securities and Exchange Commission (SEC) or the Commodity Futures Trading Commission (CFTC) under their whistleblower incentive programs.

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