Barclays PLC was fined $15 million by New York regulators following a probe into efforts by the bank’s Chief Executive to unmask a whistleblower. The DFS investigation found shortcomings in governance and controls in the bank’s whistleblower program. In particular, several members of the management team were cited for failing to follow proper whistleblower procedures. This case highlights why it is critically important for employers and employees to understand their rights and responsibilities under state and federal laws.
What is a Whistleblower?
A whistleblower is an an individual who (1) has knowledge of unethical conduct or illegal activity within their company or a government agency, and (2) reports or refuses to participate in it. Some examples of common whistleblower claims include:
- Companies illegally dumping hazardous materials
- Government contractors overcharging for goods and services
- Financial organizations engaging in accounting fraud
Why was Barclays fined?
The New York Department of Financial Services (DFS) has fined Barclays PLC after a probe into efforts by bank Chief Executive Jes Staley to unmask a whistleblower.
The DFS found that in December 2016. Staley personally directed Barclays’ security officials to identify the author of two letters criticizing the new head of the financial institutions group. The letters criticized the role of Staley and the management team in recruiting and hiring Tim Main, a former colleague of Staley’s at JP Morgan.
Although Staley claimed he was trying to protect Main from personal attacks, Barclays general counsel and the head of compliance advised Staley on numerous occasions not to try to identify the author of the letters. Barclays’ Board of Directors was told of Staley’s efforts early in 2017, conducted its own investigation, and subsequently informed the DFI. In short, Staley’s efforts to root out the whistleblower is considered to be a form of unlawful harassment or whistleblower retaliation.
Barclays entered into a consent order with DFS, agreeing to the $15 million fine. In addition, the bank must submit a plan to (1) ensure the implementation of a whistleblower program and (2) improve the board’s oversight. Barclays must also provide a report by march 31, 2019, detailing all instances of whistleblower retaliation since January 1, 2017.
This is not the first time Staley and Barclays have been sanctioned by regulators over the whistleblower matter. Staley was fined by U.K. regulators in 2016 for trying to identify the author of the whistleblowing letters. Barclays also withheld part of Staley’s 2016 bonus over his role in the incident.
How are whistleblowers protected?
Whistleblowers are under protected federal laws such as the False Claims Act, and the Whistleblower Protection Act, as well as the New York Human Rights Laws and other state laws. In sum, whistleblowers are protected against retaliation — firing, demotion, harassment and pay cuts. In the case of. At the end of the day, to have a valid whistleblower claim, you must have a reasonable belief that a private or public entity violated the law in some way. The best way to protect your rights is by consulting the experienced employment law attorneys at Lipsky Lowe LLP.