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The Sarbanes-Oxley Act‘s legacy may be mixed in some important ways, but one of it more enduring aspects has been its requirement for publicly traded companies to have mechanisms to for employees report concerns anonymously and confidentially. Most companies now have ethics reporting hotlines – in fact, the SOX confidential reporting requirement has spawned an entire industry of third-party firms providing hotline services to public companies, according to a recent Wall Street Journal article. As the Journal article reports, these hotlines have in fact in some instance led to the uncovering of serious concerns, including even instance of accounting misreporting. The September 12, 2025, Journal article, which is entitled “Sex Scandals. Accounting Fraud. It’s All Showing Up on the Corporate Hotline,” can be found here.Continue Reading An Important and Enduring SOX Legacy: Ethics Reporting Hotlines

Sarah Abrams

In the following guest post, Sarah Abrams, Head of Claims Baleen Specialty, a division of Bowhead Specialty, takes a look at the new whistleblower program that the DOJ’s antitrust division recently announced in conjunction with the U.S. Postal Service, and considers the D&O liability and insurance implications. I would like to thank Sarah for allowing me to publish her article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this site’s readers. Please contact me directly if you would like to submit a guest post. Here is Sarah’s article.Continue Reading Guest Post: Going Postal

In prior posts (most recently here), I have noted the risk to companies in the current global trade environment of governmental enforcement actions relating to the collection and payment of tariffs. Indeed, in a May 12, 2025, memo, Assistant Attorney General Matthew Galeotti identified “trade and customs fraud, including tariff evasion” as the Department of Justice’s number two corporate criminal enforcement priority.

In the latest sign that the Trump administration is ready to aggressively deploy its enforcement tools to ensure compliance with tariffs and other trade goals, the U.S. government has filed a complaint in intervention in a pending qui tam action against a South Carolina furniture company, alleging that the company used false documentation to underreport the price of furniture the company imported from China, resulting in tariff underpayment. The new case underscores the fact that as the current Trump rolls out and enforces its sweeping tariff program, companies will face significant scrutiny and potential claims risk.Continue Reading Trump Administration Brings Tariff Evasion Claim

In numerous public statements, Trump Administration officials have said the Administration intends to use the False Claims Act (FCA) to enforce certain policy priorities. For example, in connection with statements concerning the Administration’s intent to combat “illegal DEI,” officials have declared that corporate DEI policies or practices violating anti-discrimination laws could trigger FCA liability.  There are a number of levels on which potential FCA liability represents a serious corporate liability risk, not least because of the possibility of whistleblowers (including company employees or competitors) launching FCA whistleblower claims. In addition, as discussed below, a recent Southern District of New York ruling highlights how potentially massive FCA liability can be.Continue Reading More About the Trump Administration and Potential False Claims Act Liability

Earlier this month, when President Trump announced comprehensive tariffs, I speculated about whether or not the administration’s new tariff policy could create an environment that could lead to legal claims against some companies and their directors and offices. While I anticipated (and continue to anticipate) the possibility that there will be tariff-related D&O claims, one possibility I had not considered is the prospect that the new U.S. tariff regime could lead to increased number of tariff-related False Claims Act claims.

In an interesting April 16, 2025, memo, the Nixon Peabody law firm explains how “evasion of tariff requirements, including via false representation of countries of origin and undervaluation or misclassification of goods, creates the risk of substantial liability under the False Claims Act.” The law firm’s memo can be found here. (Hat Tip: John Jenkins of The CorporateCounsel.net Blog, who linked to the law firm memo in his April 23, 2025, post on the blog.)Continue Reading Trump’s Tariffs and the Risk of False Claims Act Liability

More than once I have had occasion to write about qui tam actions on this site, primarily in connection with the complicated insurance coverage questions the cases can present. Now, in unexpected and provocative ruling, a federal district court judge has held the False Claims Act’s qui tam provisions to be unconstitutional. While just the opinion of a single district court judge, and therefore without precedential effect outside of the federal district in which it was rendered, the ruling nonetheless is groundbreaking and potentially significant. The potential significance of this development is discussed below. A copy of Middle District of Florida Judge Katherine Kimball Mizelle’s September 30, 2024, opinion can be found here.Continue Reading Federal Court Holds False Claim Act’s Qui Tam Provisions Unconstitutional

In an unusual lawsuit that pairs individual wrongful termination allegations with class action securities law claims, a former employee and present shareholder of a unit of the UK-based publishing and data analytics firm RELX PLC alleges that the company fired him in retaliation for raising concerns about the company’s “greenwashing.” He also alleges that the company misled investors about the company’s climate commitments and its climate-related actions. The complaint alleges that the company made public commitments to climate remediation but at the same time continued to engage in business activities contrary to these commitments. As discussed below, this new lawsuit, although unusual, underscores the fact that climate related allegations, including greenwashing allegations, continue to represent a significant potential source of D&O liability. A copy of the August 6, 2024, complaint can be found here.Continue Reading Publishing and Data-Analytics Firm Hit With “Greenwashing” Securities Suit

The SEC has been an active cop on the beat, as reflected in its recently released Enforcement Division statistics for the 2023 fiscal year, ended September 30, 2023. Both the total number of SEC enforcement actions and the number of “standalone” enforcement actions rose in FY 2023 compared to the prior year. The agency also filed the most enforcement actions against public companies since FY 2019. In addition, the SEC obtained the second highest annual amount of financial remedies in SEC history. Continue Reading SEC Stats Show the Agency is an Active Enforcement Cop

The reach and scope of the federal securities laws is a concern most obviously relevant to publicly traded companies. However, as I have emphasized previously, private companies are not immune from scrutiny under the federal securities laws. The SEC has in fact an extensive history of pursuing enforcement actions against private companies for alleged federal securities laws violations; one needs to go back no further than the high-profile enforcement action brought against the supposed blood testing company Theranos for an example of this phenomenon in action.

A recent memo from Wiley law firm underscores these points about the exposures of private companies; as the memo’s authors put it, “private entities should be aware that an aggressive SEC can investigate and penalize them (and their executives), even if they are not directly involved in issuing securities.” The law firm’s September 23, 2023, memo, entitled “Think Because You Are a Private Company the SEC Is Not Your Problem? Think Again,” can be found here.Continue Reading Private Companies and SEC Enforcement Actions

The U.S. Supreme Court has agreed to take up a case that will address the question of whether or not a claimant alleging that his employer fired him in retaliation for whistleblowing must prove that the employer acted with retaliatory intent. The court’s consideration of the case has important implications for claimants under the Sarbanes-Oxley Act’s anti-retaliation provisions, because claimants could face significantly greater difficulty in establishing their claims if they must prove that the employer acted with subjective intent to retaliate. The case could also have important implications for retaliation claims under other federal whistleblower protection laws. The Court’s May 1, 2023, order agreeing to take up the case can be found here.Continue Reading Supreme Court To Consider Whether Whistleblower Must Show Retaliatory Intent