GAemployee

Private corp but parent company reports to SEC

3 posts in this topic

If a private company is owned by a private equity group and the equity group reports advisor and other filings to the sec......

 

Would an employee of the privately owned company have whistleblower protection for reporting violations and fraud conducted by his employer? 

 

ALSO,

In a list of interested parties submitted to the court, If the employer leaves out the name of the private equity group who owns them, are they allowed to do that or shouldn't they have included their name as well in the court filing? 

 

Thanks for any guidance or feedback you can provide.

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3 hours ago, GAemployee said:

Would an employee of the privately owned company have whistleblower protection for reporting violations and fraud conducted by his employer?

 

Depends on the applicable state law and the specific facts.  It's also not entirely clear what you mean when you say the private equity group "reports advisor and other filings to the [SEC]."  Also, to whom did the employee report the alleged "violations and fraud"?

 

 

3 hours ago, GAemployee said:

In a list of interested parties submitted to the court, If the employer leaves out the name of the private equity group who owns them, are they allowed to do that or shouldn't they have included their name as well in the court filing?

 

I assume the plural pronouns I highlighted are incorrectly used and that you're saying the employer didn't identify the private equity group who owns it and that you're wondering if the employer should have included the private equity group's name.  If so, the answer depends on the particulars of the court rule requiring disclosure and the exact nature of the private equity group's ownership of the employer.

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5 hours ago, GAemployee said:

If a private company is owned by a private equity group and the equity group reports advisor and other filings to the sec......

 

Would an employee of the privately owned company have whistleblower protection for reporting violations and fraud conducted by his employer?

 

As you are referencing filings with Securities and Exchange Commission (SEC), I assume that you are referring to the whistleblower protection provided under the federal law known as the Sarbanes-Oxley Act (SOX), codified at 18 U.S.C. § 1514A. That law protects employees of publicly traded companies from retaliation by their employer for makes specific types of reports to the government or to certain persons within the company of acts by the company which are either violations of the federal securities laws or that are violations of any federal law relating to fraud against security holders (e.g. shareholders). A publicly traded company is one whose securities (e.g. stock shares, etc) are traded on a U.S. national exchange like the New York Stock Exchange, American Stock Exchange, Nasdaq, etc. The link I provided has the full list of the exchanges. The protection also extends to any employee of a subsidiary of the publicly traded company if the results of that subsidiary are included in the consolidated financial reports of the publicly traded company. Finally, the Supreme Court has held that employees of private companies that are contractors for a publicly traded company are protected from retaliation by their employer for reports they make about the publicly traded company — not their own employer. Lawson v. FMR LLC, 571 U.S. 429 (2014)

 

So the first question here is whether the private equity group is a publicly traded company, i.e. a company whose securities trade on a national exchange. The very term private equity group suggests that the answer is no, but it is not impossible that it might have some kind of security trading on a national exchange. But if it is not a publicly traded company then the SOX whistleblower protection will not apply. 

 

If it is publicly traded, then the next issue is whether the subsidiary of the publicly traded company is also included in the consolidated financial reports of the publicly traded company. If it is, then SOX whistleblower protection will extend to the employees of the subsidiary, too. If it is not included on the consolidated financial reports of the parent company, then the employee might still be protected if his report of fraud concerns acts of the parent reporting company under the principles of the the Lawson case.

 

Finally, even if the employee is covered under SOX whistleblower protection laws, the SOX protection only extends to compaints made about alleged violations of federal securities laws or alleged violations of federal laws relating to fraud against security holders. Further, those complaints must have been made to the SEC or othe federal law enforcement agency, to a member of Congress or a Congressional committee, or to the employee's supervisor or other person in the company designated to receive such complaints. 

 

There might be other federal federal or state law protections that would apply, however, depending on the state in which the employee is employed, the exact nature of the fraud allegations, and to whom the report is made. 

 

6 hours ago, GAemployee said:

In a list of interested parties submitted to the court, If the employer leaves out the name of the private equity group who owns them, are they allowed to do that or shouldn't they have included their name as well in the court filing? 

 

That depends on the details of the litigation, the details of the company structure, and the court rules that apply, none of which I know as your post did not provide those details. 

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