SEC Brings Second Whistleblower Retaliation Case
The SEC has brought its second case for retaliation against a whistleblower against International Game Technology. According to the SEC, the whistleblower, a director of an IGT division, started working at IGT in 2008 and received positive performance evaluations throughout his tenure, including his mid-year review in 2014. Shortly after his favorable 2014 mid-year review, the whistleblower raised concerns to his managers, to the company’s internal complaint hotline, and to the SEC that IGT’s publicly-reported financial statements may have been misstated due to IGT’s cost accounting model relating to its used parts business. As part of the whistleblower’s job function, he had been tasked with evaluating the pricing methodology for used parts used by IGT, but he did not oversee the company’s accounting functions. IGT conducted an internal investigation with the assistance of outside counsel and determined that its reported financial statements contained no misstatements. Approximately three months after the whistleblower raised his concerns, IGT terminated him.
The SEC also said that during a presentation to the whistleblowers supervisors, the whistleblower raised the possible impact of the cost model on the accuracy of the company’s financial statements and had a heated disagreement with an executive supervisor on the issue. Following the meeting, the executive supervisor emailed a vice president regarding the whistleblower’s presentation, stating that “I can’t allow [the whistleblower] to place those inflammatory statements into presentations, if there is no basis in fact.”
The SEC seems to have accepted the fact that IGTs accounting was correct. So be mindful that termination of a whistleblower violates the law, according to the SEC, even if there is no factual basis for the whistleblowers allegations.
Without admitting or denying the SEC’s findings, IGT agreed to pay the $500,000 penalty and cease and desist from committing or causing any further violations of Section 21F(h) of the Securities Exchange Act of 1934.
Contact Steve Quinlivan for more information.