Becoming a whistleblower can be a difficult journey, but if you work at a company like Stanley Black & Decker, becoming a whistleblower could be easier and more rewarding than you think. This is because Stanley Black & Decker is regulated by the United States Securities and Exchange Commission (SEC), which means that employees of Stanley Black & Decker are able to participate in the SEC whistleblower rewards program. This program allows employees to report legal violations to the SEC anonymously, and, if the SEC uses your information to obtain a fine, you can claim a cash reward for being the whistleblower. The average reward paid by the SEC is ~$5 million dollars.
If you’ve witnessed bribery, corruption or any compliance violation and are considering using the Stanley Black & Decker ethics hotline or whistleblower hotline, here are five things you should consider before doing that:
- Figure out if you’ve witnessed a ‘securities law’ violation
- Preserve evidence
- Speak to a lawyer (for free)
- Consider reporting to the SEC
- Consider reporting directly to the company
In this article we’ll walk you through each of these steps, give you some tips on how to protect yourself from retaliation and explain the procedure for reporting concerns of wrongdoing. First, a little background on the company.
Stanley Black & Decker
Stanley Black & Decker (NYSE: SWK) is a manufacturer of industrial tools, household hardware and security products. The company’s best know brands are DeWalt, Black + Decker, Craftsman, Stanley, Lenox and Irwin. These brands sell cordless drills, power tools and many other products used in industrial manufacturing and home DIY. The company has stock traded in the United States on the NYSE and is regulated by the SEC. Stanley Black & Decker encourages employees to speak up in its corporate governance materials and has a Code of Business Ethics (available here) that details the company’s integrity efforts, internal controls and core business principals, which include:
- Maintaining a safe and healthy work environment.
- Providing a secure workplace for our employees.
- Embracing sustainable practices.
- Continually improving and learning from each other.
- Recognizing and rewarding those who exceed expectations.
- Creating a safe space for expressing individuality and diversity.
- Advancing Human Rights in the workplace and supply chain.
- Giving back and sharing with our communities to make a difference.
Notwithstanding this, Stanley Black & Decker has had its share of legal troubles for non-compliance with United States laws. Most recently, the company announced in its annual report that certain transactions may have violated the Foreign Corrupt Practices Act (FCPA). The FCPA is one of the most enforced anti-corruption laws in the world and often involves severe fines and even imprisonment of individuals for criminal violations of the law. The FCPA prohibits the bribery of foreign officials and requires companies to maintain accurate books and records, and to have internal controls in place to prevent compliance violations. If you’ve witnessed conduct that you believe violated the FCPA or the company’s Code of Business Ethics, you should consider the following steps before making a complaint internally.
1. Figure Out If You Witnessed a Securities Violation
The first step in becoming a whistleblower is determining where to report allegations of misconduct. Whistleblowers who have witnessed a “securities law violation” get preferential treatment under U.S. law that allows them to report anonymously, be protected from retaliation and claim a whistleblower reward.
Securities law violations typically occur when a company engages in some form of fraud, but common examples of securities violations include:
- Violations of the Foreign Corrupt Practices Act (FCPA);
- Bribery or corruption;
- Insider trading;
- Accounting fraud;
- Investor fraud;
- Failure to keep accurate books and records;
- Serious breach of internal controls;
- Serious corporate governance failures; and
- Revenue manipulation.
If you have information about any of the above, you may have witnessed a securities law violation which means you may be eligible for the SEC’s whistleblower rewards program. This applies even if the violation was committed by contractors, suppliers, consultants, sales agents or other third parties in the supply chain.
If the allegation you want to report doesn’t fall into these categories, it still might be of interest to federal regulators. As a result, the best course of action for any potential whistleblower is to speak to a lawyer, which you can usually do for free (see part 3 below).
2. Preserve Evidence
If you decide to become a whistleblower, there is no guarantee that making a complaint will lead to an investigation. In fact, the odds are against whistleblowers: out of over 20,000 tips, referrals and complaints the SEC receives annually from individuals, it is estimated only 5% get investigated. As a result, it’s important for whistleblowers to give their allegation the best chance of leading to an investigation. One way to do this is to preserve evidence.
Having evidence of the allegation preserved or knowing where evidence can be found is critical to ensuring that the person investigating the wrongdoing can verify your complaint. Even if you report the violation to your supervisor, management, compliance, or the audit committee, there is no guarantee that evidence will be preserved or that you will continue to have access to it. As a result, you should take steps to preserve the integrity of the evidence so that compliance, general counsel, the audit committee or regulators can thoroughly investigate the allegation.
Importantly, taking or copying company documents can breach your employment agreement. If you are copying the documents solely to provide to U.S. regulators or law enforcement, you shouldn’t worry too much about this, but it’s important to respect procedure and get advice from an experienced whistleblower attorney (which you can usually do for free) so that you don’t trip yourself up on legal issues.
3. Talk To A Lawyer (For Free)
If you are thinking of become a whistleblower it’s critical that you speak to an experienced whistleblower attorney. Not only is this easy to do, but it’s usually free. For example, the award-winning team at FTI Law have international experience representing whistleblowers and should be your first stop. Their team offer free consultations to whistleblowers, represent clients all over the world and they will help figure out what your options are. In addition, FTI Law also provides a free online evaluation for whistleblowers who want to get an idea of the strength of their case.
Even if you’re not interested in reporting to the SEC, it’s important that you speak to a lawyer so have enough information to make an informed decision. Reporting in the wrong way or to the wrong person can affect your legal right to be protected from retaliation, your ability to bring a lawsuit against the company and your ability to claim a whistleblower reward. An experienced whistleblower attorney can show you the correct procedure for reporting, ensure you respect legal rules and company rules. Given that consultations are provided for free and covered by the attorney-client privilege, there is really no downside to speaking with a lawyer. We recommend contacting one here or taking FTI Law’s award-winning online whistleblower evaluation.
4. Consider Reporting to the SEC
Once you have spoken to a lawyer you should have a good idea of the potential pitfalls of reporting internally and the benefits associated with reporting to an agency like the SEC, which are:
- You can report legal violations anonymously;
- You can gain protection against retaliation from your employer under United States law;
- You can become eligible for a whistleblower reward, some of which are over $100 million;
There is very little downside to reporting violations to the SEC, as the SEC handles its own investigations and there is no need to file a lawsuit. When it comes to claiming a whistleblower reward, there are special rules for how to report if you are a lawyer, director, officer or work in the compliance or audit team. However, most employees and executives will qualify for the SEC whistleblower reward program provided they can provide “original information” about a securities law violation. In fact, the SEC whistleblower rewards program is not limited to employees, it is also open to people who work as contractors, consultants, sales agents, suppliers or other third parties in the supply chain.
In any event, the decision to report to the SEC should be made in consultation and with the guidance of your lawyer. If you’re not ready to speak to a lawyer you can start by taking this free online evaluation to check your eligibility for the SEC whistleblower rewards program.
5. Consider Reporting Internally
Companies often have an ethics hotline, compliance hotline or other reporting channel that allows employees to report concerns directly to the company. In addition, companies often allow employees to report directly to management, the audit committee, the human resource department, chief financial officer (CFO), chief operating officer or even the chief executive officer (CEO). For example, there is a Stanley Black & Decker whistleblower hotline and portal available here where employees, suppliers and contractors can report ethical concerns such as:
- corporate governance issues;
- bribery and corruption;
- internal controls issues;
- violations of the false claims act and other violations of company policy.
In addition, Stanley Black and Decker also recommend reporting concerns to your supervisor. However, reporting integrity violations internally can be a precarious move. Not only can it negatively affect your legal rights when it comes to protection from retaliation, it could also expose you to harassment. Harassment of whistleblowers is not an uncommon business practice at large corporations and it’s important to engage in risk management when becoming a whistleblower to minimize the chances of retaliation. This is especially true if your complaint involves an allegation against the integrity of a more senior employee such as a director, vice president, executive vice president or officer of the company.
One of the most important things is that you can do to reduce the risk of retaliation is to maintain your anonymity. Staying anonymous when reporting and during any investigations is harder than it sounds. This is why you should speak to a lawyer to make sure you don’t accidentally reveal your identity when making a compliance report through a company’s ethics hotline. There are many documented cases of companies who retaliated against whistleblowers, as a result, we always recommend that employees speak to qualified legal counsel before reporting internally. This is especially true if the legal violations include bribery, corruption or violations of the FCPA, which can result in criminal investigations by law enforcement agencies such as the United States Department of Justice.