SEC Whistleblower Program

Overview

Under the SEC Whistleblower Program, the SEC will issue awards to whistleblowers who provide original information that leads to enforcement actions with total monetary sanctions (penalties, disgorgement, and interest) in excess of $1 million. In exchange for the valuable information, a whistleblower may receive an award of between 10% and 30% of the total monetary sanctions collected.

In determining an award percentage, the SEC considers the particular facts and circumstances of each case. For example, positive factors that may increase an award percentage include the significance of the information, the level of assistance provided by the whistleblower and the whistleblower’s attorney, and the law enforcement interests at stake. On the other hand, negative factors that may decrease an award percentage include unreasonable delay in reporting the violation to the SEC and the culpability or involvement of the whistleblower in the violation.

Under the SEC Whistleblower Reward Program, whistleblowers can submit tips anonymously to the SEC through an attorney and be eligible for an award for exposing any material violation of the federal securities laws.

The SEC Whistleblower Program continued its remarkable run of success in FY 2020. According to the SEC Whistleblower Office’s 2020 Annual Report to Congress, the office received more than 6,900 tips in the fiscal year. This is the highest number of tips the office has received in one year. Most whistleblower tips related to corporate disclosures and financials (25%), offering fraud (16%) and market manipulation (14%). Other notable areas of tips included insider trading, trading and pricing schemes, foreign bribery and other FCPA violations, unregistered securities offerings and fraud in connection with initial coin offerings (ICOs) and cryptocurrencies. Since 2011, the SEC Whistleblower Office has received more than 40,200 tips that have enabled the SEC to recover more than $3.5 billion in monetary sanctions from wrongdoers.

Consistent with prior years, the states that yielded the highest number of tips in FY 2020 were California, New York, Florida, Texas, and Pennsylvania. Other states that reported a high number of tips were Arizona, Georgia, Massachusetts, Michigan, North Carolina, Ohio, New Jersey, Virginia and Washington. The SEC Whistleblower Office also received tips from 78 foreign countries in FY 2020. The highest number of tips were from whistleblowers in Canada, the United Kingdom and the People’s Republic of China.

Whistleblowers need not be U.S. citizens to be eligible for SEC whistleblower awards. According to the 2017 Corruption Perceptions Index, a majority of countries are making little or no progress in ending corruption. This finding is consistent with PwC’s 2018 fraud survey, which reported the highest fraud levels in organizations in the past 20 years, and the ACFE’s 2021 fraud survey, which reported that 51% of organizations have uncovered more fraud since the pandemic and 71% of anti-fraud professionals expect the level of fraud to increase over the next year. As the SEC continues to promote worldwide public awareness of the SEC Whistleblower Program, we expect to see an increase in whistleblower tips and awards in the coming years.

SEC Whistleblower Program A Success

The report also indicates that the SEC Whistleblower Program is gaining momentum. In particular, the SEC Office of the Whistleblower, which first opened its doors in August 2011, has issued a majority of the whistleblower awards in the past several years:

• In FY 2015, the SEC issued $37 million in awards to whistleblowers.
• In FY 2016, the SEC issued $57 million in awards to whistleblowers.
• In FY 2017, the SEC issued $50 million in awards to whistleblowers.
• In FY 2018, the SEC issued $168 million in awards to whistleblowers.
• In FY 2019, the SEC issued $60 million in awards to whistleblowers.
• In FY 2020, the SEC issued $175 million in awards to whistleblowers.

Notably, FY 2021 is shaping up to be the best year in the SEC Whistleblower Program’s history. On October 22, 2020, the SEC issued the largest whistleblower award in the program’s history of $114 million. In addition, according to the SEC’s 2020 Agency Report, the SEC recognized a $255 million contingent liability for potential whistleblower awards to be paid in FY 2021.

SEC Office of the Whistleblower

In 2011, the SEC Office of the Whistleblower was created pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) to run the SEC Whistleblower Reward Program. The program offers monetary incentives to individuals who report information about violations of the federal securities laws to the SEC. In its short history, the SEC Whistleblower Reward Program has been extraordinarily successful in enabling the SEC root out securities fraud and protect investors. To date, the SEC Office of the Whistleblower has issued more than $500 million in awards to whistleblowers.

SEC Whistleblower Rules

Under the rules of the program, the SEC Office of the Whistleblower is required to issue awards to eligible whistleblowers who provide original information that leads to successful enforcement actions with total monetary sanctions in excess of $1 million. In exchange for the specific and credible tips, whistleblowers will receive an award of between 10% and 30% of the total monetary sanctions collected. The SEC considers positive and negative factors when determining an award percentage.

The program allows individuals to submit information anonymously to the SEC Office of the Whistleblower if represented by an attorney. Whistleblowers are also afforded substantial protection against retaliation.

Regardless of citizenship, under the SEC Whistleblower Program, whistleblowers are eligible for monetary awards when they provide original information to the SEC about violations of federal securities laws.

Since the inception of the whistleblower program, tips have come from whistleblowers in 119 countries outside of the United States. In 2018 alone, the SEC received tips from whistleblowers in 72 foreign countries. The SEC Whistleblower Office received the highest number of tips from whistleblowers in the: United Kingdom, Canada, and Australia.

To date, the SEC Whistleblower Office has issued approximately $1 billion in awards to whistleblowers. The [/https://www.zuckermanlaw.com/sp_faq/largest-sec-whistleblower-awards/ largest SEC whistleblower awards to date] are $50 million, $39 million, and $37 million. For more information about the SEC Whistleblower Program, see the eBook Tips from SEC Whistleblower Attorneys to Maximize an SEC Whistleblower Award.

Criteria for Determining the Amount of a Whistleblower Award

Many factors affect the amount of a whistleblower award. The SEC may increase the amount of an award based on the following factors:

1. The significance of the tip to the success of any proceeding brought against wrongdoers. A tip’s significance depends on, for example:
   1. the nature of the reported information, including whether the information’s reliability and completeness allowed the SEC to conserve resources; and
   2. the degree to which the information supported one or more successful claims brought by the SEC or related actions brought by other regulatory or law-enforcement authorities.
2. The extent of the assistance that you and your legal representative provided in the SEC action or related action. Considerations include:
   1. whether you provided ongoing, extensive, and timely cooperation and assistance (including when the whistleblower or their attorney provides industry-specific knowledge and expertise);
   2. the timeliness of your initial report to the SEC or to your employer;
   3. the resources conserved because of your assistance;
   4. whether you appropriately encouraged or authorized others, who might otherwise not have participated in the investigation or related action, to assist SEC staff;
   5. your efforts to remediate the harm caused by the violations; and
   6. any unique hardships you experienced as a result of blowing the whistle.
3. The SEC’s law-enforcement interest in deterring the specific violation. Consider factors such as:
   1. how much an award enhances the SEC’s ability to enforce the federal securities laws and protect investors;
   2. the degree to which an award encourages the submission of high-quality information;
   3. whether the specific violation is an SEC priority; and
   4. the dangers of the specific violation to investors.
4. Whether, and the extent to which, you participated in your company’s internal compliance and reporting systems. Think about:
   1. whether you reported internally before, or at the same time as, you reported to the SEC; and
   2. whether you assisted any internal investigation concerning the violation.

Conversely, the SEC may reduce the amount of an award based on these considerations:

1. If you participated in, or were culpable for, the securities-law violation(s) you reported. Consider the following:
   1. your role in the violation;
   2. your education, training, experience, and position of responsibility at the time the violation occurred;
   3. whether you acted knowingly and intentionally;
   4. whether you financially benefitted from the violation;
   5. whether you committed a violation in the past;
   6. the egregiousness of the underlying violation; and
   7. whether you knowingly interfered with the SEC’s investigation of the violation.
2. If you unreasonably delayed reporting the violation(s) to the SEC. This determination is based on:
   1. whether you failed to take reasonable steps to report or prevent the violation from occurring or continuing;
   2. whether you were aware of the violation but reported to the SEC only after learning of an investigation into the misconduct; and
   3. whether there was a legitimate reason for you to delay reporting the violation.
3. If you interfered with your company’s internal compliance and reporting systems. Consider whether you knowingly:
   1. interfered with your company’s reporting systems to prevent or delay detection of the violation; or
   2. made materially false statements, or provided false documents, to hinder your company’s ability to detect, investigate, or remediate the violation

Securities Law Violations that Qualify for an SEC Whistleblower Award

• Accounting fraud
• Investment fraud
• Ponzi schemes
• Foreign bribery and FCPA violations
• Cryptocurrency fraud
• Promissory note fraud
• EB-5 investment Fraud
• Fraudulent Securities Offerings
• Improper Revenue Recognition
• Inadequate Internal Controls
• Deceptive Non-GAAP Financials
• Manipulation of a Security’s Price or Volume
• Insider Trading
• Hedge Fund Fraud
• Unregistered Broker-dealers
• Investment Adviser Fraud
• Anti-money laundering violations
• False or Misleading Statements About a Company or Investment
• Violations of Auditor Independence Rules
• Misleading or Incomplete Cybersecurity Disclosures

Awards Paid from a Deferred Prosecution Agreement or Non-Prosecution Agreement

In September 2020, the SEC revised its whistleblower rules to add a new paragraph (3) to existing Rule 21F-4(d) to provide that the term “administrative action” includes a deferred prosecution agreement (“DPA”) or a non-prosecution agreement (“NPA”) entered into by DOJ as well as a settlement agreement entered into by the SEC outside of the context of a judicial or administrative proceeding to address violations of the securities laws; and further that any money required to be paid in such actions will be deemed a “monetary sanction” within the meaning of Rule 21F-4(e).

This proposed addition to Rule 21F-4 sought to make awards available to meritorious whistleblowers in cases where these alternative vehicles are used to address violations of law. Its premise was the same as that underlying current Rule 21F-4(d)(1) — that Congress did not intend for meritorious whistleblowers to be denied awards simply because of the procedural vehicle that the SEC (or another governmental entity) has selected to resolve an enforcement matter.

Rationale for Deeming Payments made under DPAs and NPAs as “Monetary Sanctions”

The September 2020 SEC release adopting amendments to the rules governing the SEC Whistleblower Program explains the rationale for deeming payments made under DPAs and NPAs as “monetary sanctions” on which an award can be based:

First, we have decided not to extend the rule to DPAs and NPAs entered into by state attorneys general in criminal cases. Second, we have added the modifier “similar” in paragraph (d)(3)(ii), which describes the Commission settlement agreements to which the rule will apply, in order to clarify the features of these agreements that merit treating them as administrative actions that impose monetary sanctions. Third, we have decided to apply the rule to any DPA, NPA, or Commission settlement agreement that would otherwise fall within the terms of the rule (provided that the agreement was entered into after July 21, 2010, which is the date after which the Dodd-Frank Wall Street Reform and Consumer Protection Act took effect).

. . . Several circumstances inform our decision to treat DPAs and NPAs entered into by DOJ as forms of “administrative action” for purposes of Section 21F. First, DOJ itself recognizes the importance of DPAs and NPAs in the hierarchy of tools that are available for addressing criminal misconduct on the part of companies, their officers, and their employees.28 DOJ has explained that DPAs and NPAs provide a “middle ground” for resolution of a criminal matter in circumstances where a declination is determined to be inappropriate, but a conviction of a company may have significant collateral consequences for innocent third parties. Second, DPAs and NPAs entered into by DOJ ordinarily impose significant continuing obligations and conditions on subject companies, coupled with clear and substantial consequences for default–including the continuation or initiation of criminal prosecution. Thus, on its face, the terms of a DPA or an NPA reflect a substantive resolution of a criminal matter by DOJ–in other words, an action–and not simply the closing of the investigation.

For similar reasons, it is reasonable to view payments made under DOJ DPAs and NPAs as “monetary sanctions” on which a whistleblower award can be based. Section 21F(a)(4) defines “monetary sanctions,” in relevant part, as “monies, including penalties, disgorgement, and interest, ordered to be paid… as a result of such action or any settlement of such action.” The payments required under a DPA or an NPA with DOJ are enforceable as a result of the company’s admissions of facts and liability, which would support the government’s criminal charges, coupled with the company’s agreement to toll applicable statutes of limitations in the event DOJ determines (in its sole discretion) that prosecution is warranted because the company has breached the agreement. Given these provisions, the practical effect of a DPA or an NPA is to compel the subject company to make the monetary payments to which it has agreed or face the possibility of criminal prosecution on the basis of its previous admissions. Under these circumstances, payments made under a DPA or an NPA with DOJ are reasonably viewed as “ordered” within the meaning of Section 21F.

In the implementation of our whistleblower program to date we have not had occasion to consider a DPA or an NPA entered into by a state attorney general in a criminal case. We proposed to include such agreements in Rule 21F-4(d)(3)(i) in the expectation that they should generally be similar in nature to DPAs and NPAs entered into by DOJ. However, we are persuaded by the concern expressed by one commenter that including state DPAs and NPAs in the rule risks introducing inconsistency in the eligibility standards for related action awards as a result of the application of varying culpability and other standards under state law.33 DPAs and NPAs are long-established in DOJ practice, and their terms, conditions, and use have been subject to a great deal of transparency.34 But the Commission has limited insight into the practices of 50 state attorneys general (plus the District of Columbia’s) in entering into DPAs and NPAs, and we believe it would be administratively infeasible to establish consistent award standards if required, on a case-by-case basis, to determine whether any particular state DPA or NPA includes terms sufficiently similar to those that typify DOJ DPAs and NPAs such that the state instrument should also be deemed an “administrative action” that imposes ““monetary sanctions.” For this reason, new Rule 21F-4(d)(3) does not extend to DPAs or NPAs entered into by state attorneys general in criminal cases.

The rule we are adopting today includes settlement agreements similar to DOJ DPAs and NPAs entered into by the Commission outside of the context of a judicial or administrative proceeding. In our practice, these agreements have included key provisions typically analogous to those found in DOJ DPAs and NPAs that warrant also treating them as “administrative actions,” with the payments required under these agreements constituting “monetary sanctions.” Among the provisions that we deem important to our analysis are: (1) substantial continuing obligations on the part of the respondent (e.g., detailed and specific cooperation requirements and a requirement that any successors to the respondent be bound by the agreement); (2) specificity as to conduct that constitutes a violation of the agreement (e.g., further violations of the federal securities laws, provision of false information, and failure to make payments on the schedule and in the amounts due); (3) tolling of applicable statutes of limitations; and (4) clear and substantial consequences for default, including the respondent’s agreement not to contest or challenge the admissibility in a future enforcement action of factual statements supporting the Commission’s case that are recited as part of the agreement, as well as the respondent’s consent to the use of any documents, testimony, or other evidence previously provided by it in a future enforcement action resulting from its violations.

Lessons Learned from SEC Whistleblower Award Determinations

The SEC Whistleblower Program has issued more than $1 billion in awards to whistleblowers since 2012, which includes a multi-million dollar award to a client of Zuckerman Law. The largest SEC whistleblower awards to date are $114 million, $110 million, and $50 million. The orders announcing the awards, while sparse, offer critical guidance on how to: (1) recover an award; and (2) maximize the award percentage. These five lessons are drawn from those orders and our experience effectively representing SEC whistleblowers.

Tip #1: Establish a Material Violation

Many SEC whistleblower attorneys will incorrectly begin the analysis of a claim by determining a whistleblower’s eligibility for an award. This puts the cart before the horse. The first step in any successful whistleblower claim is to determine whether you can establish a material violation of federal securities law. In other words, can you show the SEC that your tip concerns a violation that is serious enough to warrant the use of its limited resources?

Whistleblowers have filed more than 40,200 tips with the SEC since August 2011. In a perfect world, the SEC would be able to investigate all legitimate tips and stop even immaterial violations. However, the SEC has limited resources, so it can pursue only the best tips. (See Tip #5 on how to get the SEC’s attention with your tip.)

If you have a hunch about a violation but lack any proof, then it may be worth investigating further, rather than submitting an incomplete or speculative claim to the SEC. Tips generally fall to the wayside unless they provide “specific” and “credible” information about a material violation of the federal securities laws. That said, if you have such information about a material violation, you will most likely want to submit your Form TCR as soon as possible (see Tip #3) unless you are required to take certain steps prior to submitting a tip in order to be eligible for an award.

Tip #2: Quickly Determine Eligibility Because It May Affect Award Percentage

The next step in any successful whistleblower claim is to determine eligibility. This step follows a finding of a material violation because, while most individuals cannot establish a material violation, almost everyone can become eligible for an award, if certain steps are taken. Lawyers, external and internal auditors, and even individuals involved in the wrongdoing are among those who may be eligible for awards.

Analyzing an individual’s eligibility is complex. The analysis differs depending on the individual’s relation to the company and how the individual obtained the information. For example, auditors may report to the SEC and be eligible for an award if:

they have a reasonable basis to believe the disclosure is necessary to prevent conduct that is likely to cause “substantial injury” to the financial interest or property of the entity or investors; they have a reasonable basis to believe the entity is engaging in “conduct that will impede an investigation of the misconduct”; or at least 120 days have passed either since they properly disclosed the information internally, or since they obtained the information under circumstances indicating that the entity’s officers already knew of the information. Auditors who obtained the information during their audit of an issuer, however, will be eligible for an award only if:

they have a reasonable basis to believe the disclosure is necessary to prevent “a material violation of the securities laws” that is likely to cause “substantial injury” to the financial interest or property of the entity or investors; they have a reasonable basis to believe the entity is engaging in “conduct that will impede an investigation of the misconduct even if the submission does not contain an allegation of audit firm wrongdoing”; or they report the securities-law violation to a superior in their independent public-accounting firm, and the firm fails to promptly report that information to the SEC. Eligibility depends on various factors. If whistleblowers are uncertain about their eligibility, then they should consult with an experienced SEC whistleblower attorney. A skillful analysis may be the difference between a multimillion-dollar whistleblower award and no award at all.

Tip #3: Act Fast

It is never too early to think about maximizing your potential award. Whistleblowers may receive anywhere from 10% to 30% of the monetary sanctions collected in actions brought by the SEC and in related actions brought by other regulatory or law enforcement authorities. And the timing of a whistleblower’s tip is a significant factor that the SEC considers in determining whether, and how much, to award.

To be eligible for an award, a whistleblower must first submit “original information.” Original information is any information that the SEC does not already have. Whistleblowers who wait to report information, therefore, risk that someone else will submit the same information to the SEC first. Keep in mind that even if the SEC has already opened an investigation, whistleblowers may still qualify for an award if their information “significantly contributes” to the success of an action.

Next, the whistleblower office may reduce the amount of an award if the whistleblower unreasonably delays reporting the violation to the SEC. About 20% of the awards issued through 2015 were reduced because of an unreasonable reporting delay. In making this determination, the whistleblower office considers:

whether the whistleblower failed to take reasonable steps to report the violation or prevent it from occurring or continuing; whether the whistleblower was aware of the violation but reported to the SEC only after learning of an investigation into the misconduct; and whether there was a legitimate reason for the whistleblower to delay reporting the violation. For example, on February 28, 2017, the SEC issued an order reducing an award to 20% of the monetary sanctions collected “because of both the Claimant’s culpability in connection with the securities law violations at issue in the Covered Action and the Claimant’s unreasonable delay in reporting the wrongdoing to the Commission.”

Finally, to be eligible for an award, some whistleblowers must take certain actions (e.g., the 120-day exception for auditors under certain circumstances, see Tip #2) before reporting to the SEC. Whistleblowers should therefore understand and consider the specific eligibility requirements in determining when to report to the SEC.

Tip #4: Know the Rules Before Filing with the SEC

Besides avoiding “unreasonable delay,” whistleblowers should be aware of other factors (see § 240.21F-6) that influence the size of awards. Whistleblowers must learn the rules early on because, as mentioned, some actions must be taken prior to filing with the SEC. For example, the whistleblower office may reduce the amount of an award if the whistleblower participated in the reported securities-law violation or interfered with the company’s internal compliance and reporting systems.

On the other hand, the whistleblower office may increase the amount of an award based on:

the tip’s significance to the success of any proceeding brought against wrongdoers; the assistance that you and your legal representative provide in the SEC action or related action; the SEC’s law-enforcement interest in deterring the specific violation; and whether, and the extent to which, you participated in your company’s internal compliance and reporting systems. Accordingly, whistleblowers have an incentive to report internally to their companies’ compliance personnel before going to the SEC. If whistleblowers choose to report internally, then they should also report the same information to the SEC within 120 days. That way, in evaluating a potential award, the SEC will consider the date of the internal report, rather than the date that the whistleblower reported to the SEC. As the SEC puts it, the whistleblower office will “hold your place in line.” This may determine, for example, whether a whistleblower submitted “original information.”

Tip #5: Draft a Tip that Grabs the SEC’s Attention

The SEC Whistleblower Office is relatively small, and thousands of tips are submitted annually. According to the SEC’s Annual Report Congress on the Whistleblower Program, the office received 6,911 tips in fiscal year 2020. As such, SEC whistleblowers and their attorneys should tailor their tips to quickly grab the whistleblower office’s attention. While one could write a book on this section alone, here are a few “rules” to keep in mind when drafting submissions:

1. Provide the SEC with a clear roadmap for a successful enforcement action. Do not submit a pile of documents and expect the whistleblower office to figure it out. Instead, walk the SEC, step by step, through specific and credible examples of the violation(s). A February 2020 order awarding $7M to a whistleblower recognized the whistleblower’s “extensive and ongoing assistance during the course of the investigation, including identifying witnesses and helping staff understand complex fact patterns and issues related to the matters under investigation; the Commission used information Claimant provided to devise an investigative plan and to craft its initial document requests; and recognition of Claimant’s persistent efforts to remedy the issues, while suffering hardships.”
2. Demonstrate how the violation is “material.” As mentioned, the SEC investigates only those violations that are serious enough to warrant the use of its limited resources. While demonstrating materiality, be sure to analyze the legal issues and tie them to the specific violations. This should include a discussion of potential challenges that the SEC may encounter and how the agency should address them.
3. If possible, provide the whistleblower office with documentation of the violation. The SEC is much more likely to act on a tip that is supported by strong evidence. The SEC does not, however, want all types of evidence. For example, the SEC does not want information that may violate the company’s attorney-client privilege (e.g., documents, including emails, that involve advice from inside or outside counsel).

Prevailing in a Retaliation Whistleblower Case With Prior Performance Problems Every case is unique and the outcome of a case depends upon variety of factors, but a prior performance problem is not an insurmountable obstacle to prevailing in a whistleblower retaliation case. A whistleblower can prevail in a retaliation case even if they had a performance problem or problems prior to blowing the whistle. To prevail in a retaliation case, a whistleblower must show that 1) they engaged in protected activity, 2) their employer took an adverse employment action against them, and 3) the protected activity was a contributing factor to the adverse employment action. See Arnett v. Hilmar Cheese Co., 2018-CPS-00002 at 3 (ALJ Sep. 11, 2018) (citing various whistleblower statutes).

The contributing factor causation standard is favorable to whistleblowers. Under this standard, a whistleblower need only show that their engaging in protected activity in some way contributed to the employer taking an adverse action against them. A contributing factor is “any factor, which alone or in combination with other factors, tends to affect in any way the outcome of the decision.” Id. (citing Tocci v. Miky Transp., ARB No. 15-029, ALJ No. 2013-STA-071 (ARB May 18, 2017)). If an employee proves that their protected activity was a contributing factor in their employer taking an adverse action against them, to avoid liability, the employer must show by clear and convincing evidence that it would have taken the same action in the absence of the protected activity. Id. at 3-4 (citing 15 U.S.C.A. § 2087(b)(2)(B)(i)-(iv)).

In Arnett v. Hilmar Cheese Co., the ALJ denied the employer’s motion for summary judgment where it had disciplined the employee/whistleblower for repeated performance issues, including issuing him with multiple notices of corrective action. Id. at 4-5. In a coaching session with his supervisor, the employee became argumentative, reported that he did not believe the employer’s fume hoods were safe, and stated that he intended to verify their safety with OSHA. Id. at 2. His employer terminated his employment two days later. Id.

In a motion for summary judgment, the employer asserted that it would have terminated the whistleblower’s employment in the absence of his protected activity due to his repeated performance issues, which culminated in his “argumentative, combative, disrespectful, threatening, and insubordinate” behavior in the coaching session. Id. at 4-5. The ALJ, however, found that there was a genuine issue of material fact as to whether the disclosure about the fume hoods was a contributing factor in the whistleblower’s termination. Id. at 4. The ALJ emphasized that the temporal proximity of two days suggested that the protected activity may have been a contributing factor in the termination, even if the employer acted without retaliatory intent. Id. Further, the ALJ explained that the sooner an adverse action occurs after an employee engages in a protected activity, the more likely it is that the protected activity contributed to the adverse action. Id.

Finally, the ALJ stated that, based on the employer’s explanation of the facts, the employee’s behavior during the coaching session, where he became “argumentative . . . and insubordinate” did not seem to be particularly egregious or any worse than his prior conduct. Id. at 5. Therefore, the ALJ held that the evidence was insufficient to support the employer’s assertion that the report about fume hoods in no way contributed to the employee’s termination. Id. The ALJ concluded that without making a determination on the credibility of the parties involved, it was inappropriate to conclude that the employer had proven by clear and convincing evidence that it would have terminated the whistleblower in the absence of his protected conduct. Id.

In denying the employer’s motion for summary judgment, the ALJ confirmed that a whistleblower may prevail in a retaliation case even where they have had prior performance issues. While an employer may try to cite an employee’s performance as the basis for an adverse action, that employer must prove that the protected activity in no way contributed to the action. A whistleblower may prevail even where the employer has documented various and repeated performance issues; for the contributing factor causation standard only requires that the protected activity played some part in employer taking the adverse action. Especially where, as in Arnett, temporal proximity or another aspect of the case implies causation, an employee can still prevail.