When an employee’s former manager adds material to a terminated employee’s file post termination to beef up the excuses for the termination, it is never a good sign. That was apparently done by JPMorgan Chase to a terminated whistleblower after he went to the New York Times to complain about certain brokerage practices. This additional material was in the form of alleged customer complaints. The problem for the bank was that when these customers were contacted, they denied bringing the information to the bank. Indeed it turned out that the terminated whistleblower’s former manager wrote up the complaints and put them in the whistleblowers file. This and other factors led to a Department of Labor finding that the employee was terminated in violation of Sarbanes-Oxley whistleblower protection provisions and a monetary award. A spokesman for the bank indicated it would appeal the findings.
For any compliance professional, a speak-up culture is a key component of an effective compliance program. Just as effective, however, is a company that actively fights employees who claim whistleblower status and protection. But the effect is not to create a more effective compliance program, because it tends to stifle those who may consider bringing forward information about company activities. Yet the allegations of this matter take retaliation against whistleblowers a step further by adding evidence to support a termination well after the fact.
Such conduct is generally not viewed positively by regulators or adjudicators. According to reports, the federal inquiry found the manager in question acted “inappropriately” in adding the customer complaints. Moreover, this manager is now himself the subject of a FINRA investigation for “creating misleading documents and making misleading statements.”
Every chief compliance officer needs to be aware of such situations in their organization. Such a finding, even when made by an adjudicatory process in the Department of Labor, can have far reaching consequences if FCPA or other securities law violation is found. It could well be evidence of the lack of an effective compliance program.