When A Leaker Blows The Whistle

20 Jun When A Leaker Blows The Whistle

Posted at 15:08h in Litigation, Securities Litigation & Regulation by

Numerous recent stories have reported criticism of former FBI Director James Comey’s “leak” of a memorandum summarizing his non-classified conversations with President Donald J. Trump. Critics, mostly in the political world and blogosphere, have decried Comey’s so-called leak as illegal or unethical.  Removed from the political context, the question can be fairly asked: how does Comey’s act of bringing to light an act or pattern of behavior representing potentially illegal conduct differ from, say, a coal miner’s letter to his local newspaper detailing unsafe conditions in the nearby mine, or a corporate controller’s report to the Securities and Exchange Commission that his CFO has been cooking the books for months, or any other type of run-of-the-mill whistleblowing?

The federal government has numerous laws and programs that incentivize current and former government employees and ordinary citizens to come forward with information of wrongdoing in the workplace, or retaliation for reporting wrongdoing in the workplace.  A non-exhaustive list of these laws includes the Whistleblower Protection Act, False Claims Act, Foreign Corrupt Practices Act, Sarbanes-Oxley and Dodd-Frank, among others.  All of these laws are intended to lead to the same ultimate result: to root-out and discourage illegal, corrupt or other misconduct, and to protect those who come forward and expose such conduct.  Some, such as those administered by the Internal Revenue Service, the SEC, Commodities Futures Trading Commission and claims brought under the False Claims Act even reward whistleblowers with a bounty if the wrongdoing alleged by the whistleblower is proven to have occurred.  These statutes represent longstanding congressional policy valuing and lifting-up employees who seek to preserve integrity and standards of behavior in governmental and commercial affairs.

Leaks, on the other hand, particularly of classified and certain types of confidential information, are prosecuted.  Many stories have recently reported how aggressive the Obama administration was in pursuing and prosecuting suspected leakers.  In light of these conflicting priorities, how then do we evaluate Comey, a career public official, as prosecutor and chief law enforcement officer, where the information he reported concerned personal experiences and conversations rather than market sensitive or competitive information: leaker or whistleblower?

The answer appears to lie in the process by which the information of wrongdoing is brought forward.  Whistleblower statutes typically require the whistleblower to go through designated channels, for example, a supervisor, the relevant agency’s Inspector General, or the Office of Special Counsel, an independent federal agency that investigates allegations made by government employees.  Leakers, on the other hand, adhere to no such process and tend to bypass these designated channels and go directly to a media outlet.  Such was the case with Comey, who caused his memorandum to be released through an intermediary to the New York Times.

Did he know the appropriate channels through which a proper whistleblower disclosure need be made?  Of course he did.  After all, he had previously served as U.S. Attorney for the oldest federal prosecutor’s office in the country, the Southern District of New York, as well as Deputy Attorney General and Director of the FBI.  From his many years atop these high level law enforcement perches, Comey clearly knew the established channels for a whistleblower.  So informed, he must have concluded that the only – or at least the most reliable – way to blow the whistle against this most unique of all suspected violators, the President of the United States, was to step outside the executive branch, knowing full well that his tale would immediately be brought back within it.

Indeed, it was reported that his purpose in choosing to go to the press was to inspire the appointment of a Special Counsel – an independent investigator not in the President’s chain of command – to investigate the matters on which he “blew the whistle.”  This, in effect, parallels what would have happened had he reported through one of the designated channels, for example, to the Office of Special Counsel.  In that sense, Comey’s bypassing a designated channel nonetheless achieved the same intended outcome, namely, an independent review of the conduct on which he blew the whistle.  Does the fact that the appointment came after he bypassed the established channels push him across the line from whistleblower to leaker?  Does the exceptional nature of his situation, as chief law enforcement officer reporting on potentially illegal conduct by the President, provide grounds for latitude in assessing his status?  It certainly raises doubt as to whether the single detail of not reporting through an established channel is sufficient to transform behavior the government widely encourages, and in some cases rewards, into conduct to be stigmatized, or even subject to prosecution.  If uncertain, ask yourself: how would you view the informed coal miner?

Ron Wood

Ron Wood

Ron Wood is a partner with Brown White & Osborn LLP. A former Assistant Director in the SEC's Division of Enforcement, Executive Director in the Law Division at Morgan Stanley, and litigation partner with Proskauer LLP, he practices securities law with a focus on regulatory and enforcement matters. He also conducts internal investigations and complex commercial litigation.
Ron Wood

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