When Dodd-Frank became law in 2010, companies with corporate compliance programs viewed the whistleblower provisions warily and anticipated a potential negative impact on the success of their own internal reporting programs. According to a Law360 piece authored by Vinson & Elkins partner Amy Riella, some companies feared that employees would circumvent the internal reporting process in favor of taking information directly to the SEC to reap the financial awards. A related fear was that corporate officers would be incentivized to do the same as they learned of misconduct through compliance channels. The SEC sought to allay these concerns by creating implementation regulations that disallowed corporate officers from bringing actions when they learned of the relevant information through the role they played in the compliance process. In other words, the officer would have to learn of the fraudulent activity through his or her own “independent knowledge or independent analysis.” There is an important exception to this rule – an exception that recently earned a former company officer a six-figure award for reporting securities fraud. The exception states that once the company becomes aware of the issue, it has 120 days to address the alleged misconduct. If the company fails to act within the allotted time frame, the door opens for the otherwise ineligible corporate officer to use the second-hand information to become the corporate whistleblower.
Like sands through the hourglass, so are the days of testimony in the Pao/Kleiner Perkins sexism trial. This week’s installment pitted one female venture capitalist against another. Mary Meeker, the top-ranking female partner at Kleiner Perkins, testified to the virtues of Kleiner Perkins and her belief in its fair treatment of women. When gender is a fundamental issue, the testimony of one woman’s experience versus the other can prove pivotal. According to Fortune, Ms. Meeker, a well-known investor who was once dubbed “Queen of the Net,” by Barron’s Magazine, offered a perspective designed to undercut the claims of discrimination advanced by Pao in the previous weeks’ testimony. According to USA Today, Ms. Meeker testified that "Kleiner Perkins is the best place to be a woman in the business." That said, high-ranking women are a minority in the firm and their representation in the senior partnership has remained relatively constant. Kleiner Perkins has seven senior partners, two of whom are women. At the time of Ms. Pao’s termination in October 2012, three of the eleven senior partners were women.
Speaking of Silicon Valley, a new study suggests that California’s aversion to non-compete agreements is having the very positive impact of making it the global capital of innovation, according to Bloomberg Business. Research Policy published the study that described a “brain drain” that occurs in states that enforce non-compete agreements. Rather than taking positions in states that limit their ability to job hop, inventors and other highly sought-after professionals opt to relocate to states like California where they can follow new opportunities without fearing adverse consequences. The study also served as a not-so-subtle indictment of policymakers who favor restrictive employment covenants. “Policymakers who sanction the use of non-competes could be inadvertently creating regional disadvantage as far as retention of knowledge workers is concerned.” It should come as no surprise that some states seek to follow California’s lead and ban them. Massachusetts, one such state and the home of MIT and Harvard, has surely seen its students looking westward as graduation approaches. Perhaps the real motivation behind the effort is to reverse the brain drain . . . and retain the regional talent.