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Address businesses liabilities with sound compliance, experienced litigation counsel
One of the points we mention fairly frequently on this blog is that proactive regulatory compliance is critical for businesses. One reason for this is that the costs for failing to comply with federal laws and regulations can be significant.
Take, for example, a recent federal case in New York in which a jury awarded a whistleblower $1.6M in compensatory damages under the Sarbanes-Oxley Act, which was enacted to protect investors by requiring integrity of disclosures made under securities laws and other disclosures. In that case, the plaintiff had been employed by a pharmaceutical company to work on the development of a drug to treat post-operative bowel dysfunction, and during the course of that work learned that the company’s shareholders had been mislead about the results of clinical trials of the drug.
The employee, upon learning this information, informed the pharmaceutical company that he believed fraud had been committed against shareholders. The company thereafter terminated the employee for failing to disclose how he had learned the information. The employee denied that he had wrongfully obtained access to the information. Ultimately, the employee won the case, which led to the sizeable whistleblower award.
Sound regulatory compliance can go a long way in preventing such litigation by ensuring that companies have processes in place to manage potential liabilities, but even the best compliance efforts cannot completely reduce the risk of liability. The best approach, with respect to any area of liability, is to establish a sound compliance protocol, as well as to work with experienced counsel in dealing with liabilities that slip through the cracks.