Enforcing ESG Claims through the SEC's Whistleblower Program - Poppy Alexander

Sarah “Poppy” Alexander is a partner in Constantine Cannon’s San Francisco office.

She represents whistleblowers and government entities in qui tam lawsuits, as well as under the various agency whistleblower programs including those administered by the Internal Revenue Service, Securities and Exchange Commission, The Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN), Commodity Futures Trading Commission, and Department of Transportation.  Poppy’s practice focuses on issues of international corruption and financial misconduct, with a specialty in the Foreign Corrupt Practices Act and money laundering cases.  She writes and speaks regularly about emerging topics in financial fraud, including sanctions violations, Special Purpose Acquisition Companies or SPACs, and cryptocurrency.  Poppy has been selected to the Northern California Super Lawyers Rising Stars list every year since 2016.

Prior to joining Constantine Cannon, Poppy was an associate attorney at Rosen, Bien, Galvan & Grunfeld LLP, where she worked to ensure prisoners received appropriate medical and mental health care and adequate accommodations for disabilities in jails and prisons.

Poppy maintains an active pro bono practice, with a particular emphasis on protecting the rights of children and adults in detention and protecting communities harmed by corporate bad acts abroad.  Poppy is also a board member for the Impact Fund, an organization devoted to funding and supporting cutting edge civil rights litigation.

Poppy graduated from Harvard Law School, where she was the co-Editor-in-Chief of the Harvard Civil Rights-Civil Liberties Law Review and an active member of the Harvard Human Rights Clinic. Poppy spent one of her law school summers at the ACLU Reproductive Freedom Project, fighting for abortion rights and the rights of pregnant women. After law school, Poppy clerked for the Honorable Martha Craig Daughtrey of the U.S. Court of Appeals for the Sixth Circuit in Nashville, TN.

Poppy holds an M.A. in Political Theory from the University of California, Berkeley, and a B.A. from Yale College.

Further Reading:

• SEC Tip Page
• How the SEC Whistleblower Program Is Changing the Enforcement Landscape, American Constitution Society
• Tell Climate Money Watchdog your story through one of our secure communication channels.

Transcript

Greg Williams: 0:10

Thank you to our listeners for joining another podcast episode of Climate Money Watchdog. Tonight, we have with us Poppy Alexander otherwise known as Sarah Alexander, who is a partner in Constantine canons, San Francisco office where she focuses on whistleblowers who are bringing forth what are known as Key Tom or qui tam cases, which is, as we explained in a previous podcast, a Latin term, which means something like on behalf of the king, it means that as a private citizen, you are taking another private entity, usually a corporation to court claiming that they have somehow defrauded the United States government. And not only can that result in the government recurring on I'm sorry, recovering, the the the resources that of which they were defrauded. But the government can also recover up to three times that amount in penalties. And depending on whether the whistleblower involved brings the case through to its conclusion, or simply hands it off to the Justice Department, the whistleblower may stand to recover a substantial portion of that as well. So is there anything else you would like to say in introduction, Poppy?

Poppy Alexander: 1:34

No, I'm just really excited to be here. And thank you for having me.

Dina Rasor: 1:40

This is Dana Rasor, and I know that Greg has introduced it, to the climate, people who are listening, we're going to be talking about the SEC program, which is a whistleblower program for people for the SEC to so with a company, I'm going to let her explain it better. But when a company puts some kind of false claim from untrue statement, whatever in their SEC filings, and whatever, they had the same kind of whistleblower thing is, as a qui tam. And it just recently, and the reason I wanted to say this up front is for all the environmental people who are talking, listening right now can realize that right now, they have created a new task force that includes environmental and climate disclosures, and sec, the SEC, and it's something that environmentalists, climate advocates, local people, whatever who are going it's an it's a new, another newer with an inquiry tam to go in, and, you know, blow the whistle on them, and you also get a percentage. But that said, I'm gonna let Poppy who is much more of an expert on that than I am. Explain it.

Poppy Alexander: 2:57

Thanks so much. So the SEC whistleblower program is actually technically not a key tam program. And, and that matters in a couple of different ways. And I'll talk about those sort of down the line because they it really matters at the end of a case more than anything else. But the the SEC whistleblower program was created as part of the Dodd Frank amendments along with a similar whistleblower program for the commodities future trading commission. And both of these programs allow anyone with information related to a violation of for the SEC of securities laws, to bring that information to the commission. And generally speaking is sad, you know, these sorts of violations are material misstatements made to investors or to the investing public. So the company that's lying about their revenue, or lying about something else that would affect your decision to invest in a company. Of course, securities laws are broader than that. And so the SEC has jurisdiction over anything that might that might fall within it. And, you know, it's it's pretty helpful to think about the formation of the SEC program. So the reason we have it is actually because there was an outside analyst who was trying to bring information to the SEC about the Bernie Madoff Ponzi scheme. And the SEC didn't listen, partly because they just sort of didn't have the mechanism by which to take in and whistleblowers information. So Congress created a mechanism for those. So now we have a whistleblower office, we have a formal process for filing information. And the really interesting thing about that, of course, is the sort of quintessential SEC whistleblower is not an insider. It's an outsider. It's an outside analyst who looked at Bernie Madoff's returns and said, This doesn't make any sense. This isn't possible. And so the SEC whistleblower program was really set up with that idea in mind that sometimes Anyone has information that they might not have themselves that affects how, you know, affects the investing public, and affects a company's bottom line in a way that the SEC needs to know about. The way that the program works is that you file what's legally called a tip. And you file it through an online system. It goes to the whistleblower office, who then farms it out to a an enforcement team at the SEC, who investigates it. And their investigation might look many different ways, depending on the kind of case we're talking about. But they will, you know, for example, pull company data, they will pull their own audit data, they might interview you, the whistleblower, they might talk to company insiders, what have you, they will do whatever they need to do to investigate their case. And at the end of it, they will make an enforcement decision. And here's where it really matters, the difference between the SEC program and kitan lawsuits. If the SEC says no, and they're not going to bring an enforcement action, unfortunately, the whistleblower can't do anything about it. Because we the whistleblowers aren't stepping into the shoes of the King, the same way we do in the False Claims Act, we, all we can do is file a tip and tell the SEC, here's why you need to do something about it, which is a real disadvantage to the program compared to a kitan program. But there are advantages. A big advantage for me a lot of my clients is that you can stay confidential throughout the entire process in the SEC program, you can file anonymously, you never have to tell the SEC, your name, until the moment where if you have a successful case, they write you a check, and they want to know what name to put on the check. But until then, as long as you have a lawyer representing you who can say yes, I've verified my client's identity, you know, they're legit. You never have to give the SEC your name. And they are very, very good at respecting anonymity, or respecting confidentiality. They do. They go above and beyond to make sure that it whistleblower's identity is never public. And you can see that now, where if you happen to ever read an SEC press release, they will never admit that a whistleblower is behind any of their enforcement cases. However, they will admit in other reports that pretty much every single one of their good cases these days comes from a whistleblower. So you should probably just assume that if you've seen SEC enforcement action, there was a whistleblower behind it, because there probably wants and that's a big dip, they they know the value of their program, they support it. And they're doing a lot to try to get even more high quality whistleblowers through the door. So that's okay.

Greg Williams: 7:48

Go ahead, Greg. Instead of on behalf of the king, this is on behalf of fellow shareholders.

Poppy Alexander: 7:54

Yes. Excuse me, in a sense, yes. I mean, you don't have to be a shareholder to bring the case. But Sure. You're, you're bringing it on behalf of the investment public. And you know, the SEC is role is to protect the integrity of the markets. And that means, particularly protecting the integrity of what they call retail investors, which is, you know, you and me and everyone else who's investing on their own. And so that's, that's their job, and they take it very seriously.

Dina Rasor: 8:26

Okay. I know from having worked on many, many cases, that you file it, and you love the government supposed to have it in 60 days, but that usually you have to give them extensions over and over. And that usually takes one to three years. And so it's a very long slog, how long does the SEC tip thing take for them to investigate to get back to you, so you know, whether or not, they're going to go anywhere with it.

Poppy Alexander: 8:56

It's also a long slog, these are not short processes. When when you know, clients come to us we tell them to, they're in it for the long haul. And they better liked us a lot, because they're going to be talking to us a lot for a very long time. Generally, three to five years is a good guest for an SEC case as well. Some take much longer, some take shorter, and generally speaking, if a case is going to be shorter than that, it's because it's not going anywhere, though. The good cases, the cases that they're really, you know, come to fruition, three to five years is a good guess. And part of that also is the SEC at this moment is taking a bit of time to review a ward application. So after there is an enforcement action, you then have filed sort of a separate application saying hey, sec, I deserve an award for this enforcement action that you brought in awards range from 10 to 30%. of whatever the enforcement action was. The SEC almost always gives closer to the 30% mark than the 10% mark. Generally speaking, it's around 30%. But because there's such a huge number of whistleblower tips at this point, it's 10s of 1000s, they receive a year, it can take quite a while for them to get through award application. So that's another year, usually at the end of the process. So all told, it's not short. And it, it just something that we have to tell our clients to be prepared to wait.

Dina Rasor: 10:25

Okay, and, and when you do qui tam cases, you have to file it under seal, which means until the government decides to either pitch it back to you, and have it served, or you go, or they take it, and they can extend the seal. So you can't talk about it. That's one of the frustrating things a lot of whistleblowers is when you file a qui tam case, you take, you know, it takes all that time and you know, the frauds going on going on, and it makes you crazy because things are happening. Is the SEC tip filed under seal. And are you do they disqualify you if you talk about it anywhere else.

Poppy Alexander: 11:06

So no, it's not under seal. And part of that has to do with the fact that you don't file in court, right. So there's no court order of a seal like there is with the False Claims Act. However, we, in almost every circumstance, counsel our clients to treat it as if it is under seal. And the reason for that is we want to do everything we can to support the SEC investigation. And generally, that means not tipping off the defendants to the existence of the investigation. And so we almost never talk about it. There are exceptions to that. And there are times where our clients for various reasons do go to the press, for example, even when it's cases technically under investigation. And I'm seeing more and more advocates using the SEC whistleblower program as an advocacy tool. And oftentimes they talk about it, and may even issue a press release upon issuing a whistleblower submission. And so I think people are realizing that this can be a pretty powerful advocacy tool. That's it, I haven't. I don't think the program has been around long enough. It's about 10 years old now, for us to really know how successful those cases are going to be. So if you don't talk about it, you know, we sort of know that's helping the investigation. When you do talk about it. I feel like we don't, we don't quite know yet how that strategy plays out.

Dina Rasor: 12:28

So if we do talk about it and go to press release, does the SEC get mad, put it on the back burner?

Poppy Alexander: 12:35

That's part of what we don't know yet. We haven't we haven't let me put it this way. We haven't seen the counterfactual. So I don't know. I don't know. But we do know that that's a factor in them determining an award percentage is, you know, how helpful were you to the investigation? Did you do anything to interfere? And we certainly consider it very likely that they will consider going to suppress interference with that investigation.

Greg Williams: 13:04

So something that I know, I've experienced, and I wonder if both of you have as well is that in most contexts, whistleblowers need to have a tremendous amount of patience and determination to see their cases through. And the ones that don't have that kind of patience, and the ability to see through, you see things through, you know, wind up with their cases, you know, not being resolved in a way that's satisfactory. Now, there are plenty of them that don't have satisfactory resolutions anyway. But I wonder if there's anything you'd like to comment on in terms of what what sort of temperament tends to be successful in these in these kinds of cases?

Poppy Alexander: 13:50

I mean, it's a great question. It's really true. It's hard to be a whistleblower. I mean, I think it's something that a lot of people don't think about enough of exactly how hard it is to be a whistleblower. And we, we always give our clients what we call the cold shower talk, before agreeing to take a case, we make it very clear that this is going to be a long, hard process. And it's going to be difficult, and there's going to be some point where they're probably going to hate us. And they're going to think that we're not doing enough. And we're going to have you know, these things all happen. And it's because it is a very long process and requires a huge amount of patience. And no matter how many times you're told that and, you know, it's it's hard to do and certainly in the False Claims Act context in the key town lawsuits, you know, where it's under sealed, you can't talk about it to your friends, your family that is very difficult. And in the SEC context, particularly if you're an insider, you know, I've had some clients who are current employees of the company they're reporting on, and that can be a very emotionally challenging position to be in. Where you know, there's this massive investigation Jim going on that you know all sorts of things about and that affect your, you know, your colleagues and you can't talk to them about it. And, you know, maybe you're even on the other side, where you're, you know, dealing with the company asking you for, you know, information requests that's going to, you know, go with the SEC, and these things are hard. These things are very, very hard, and we know it. So yes, it does take a very specific kind of determination for our clients, which is one of the reasons that I love my job so much, quite honestly, is because my clients are all extraordinary people. And they have to be, they just have to be they're all total experts in their own weird little niche, whatever it happens to be. And they're all so determined to do the right thing. And it's really inspiring.

Dina Rasor: 15:54

Yeah, I I've spent a good portion of my career basically working with whistleblowers, I usually work with whistleblowers and then bring them to lawyers for qui tam and I haven't done an SEC case. But or I have them testify to Congress or something. And people say how can you stand? work in this field, I suppose I get to work with the best and most honest people. But what I have told whistleblowers, and I want to put this out there, so if someone's listening, what the maddening thing about anything legal or even administrative, like the SEC is, it's a hurry up and wait situation, that you will have this enormous amount of time where you're putting in a disclosure statement for qui tam and you will every single thing the lawyers will be fluttering all around you are you sure? Are you sure you know what what do we have proof, then you file it. And then usually the they come in, they will come and talk to the whistleblower sometimes. And also, since I've been an investigator on the case, we were always sent in when they bring in the government investigators. But what I used to tell people who just they're so passionate about what they're doing, and they're so frustrated. And I said, Look, you can't let this dominate your life. Because this can go on for years, you're going to be a mess. And you know, and I, having been trained as a journalist, one instant gratification, I want to write a story, publish it and move on. So legal things are very hard. So I tell them, I said and I learned this from effect, another famous whistleblower mentor of mine, he said, when you're going to have to work on it, and occasionally, and so you put it in a box in your brain. And when you have to work on it, you bring the box out, you open it up, you work on it, you do what you have to do, then when it's going to be long period of time, before anything happens, you close the box, and you put it in the closet, and you go on with your life. And then somewhere I'll call you and say oh, we need to do this, okay, then you take the box out, but do not let the box be in front of you of your life because you will be miserable. And especially qui tam you can't talk to your family about it. And so therefore it'd be very, very frustrating. But um, and I found that the whistleblowers, I'm sure Bobby's running this to the whistleblowers that you know, are going to go the long distance aren't the ones who come to you and say My boss is being mean to me I getting a raw deal. They come all righteously angry that the government's being cheated, or the public's being cheated. And those are the ones you want to grab, because it's our redstone. I don't usually I tell them write me a two page summary. And they can't even to the sour grapes ones are like, Oh, that's too much work. And so the ones that have the real passion will do the work. But it's also then kind of a counter indicator thing, because it's, it's those are also the people that want something to stop now. So the next thing I'd like to ask you about is what kind of cases you've worked on. I know, you said that you can't work talk in great specifics, but you can talk about other cases that have been settled and the sizes of the rewards not you know, you say 30% Okay, 30% of what that kind of thing, and generally give us an idea that what's out there.

Poppy Alexander: 19:17

Um, you know, my SEC cases and my firm's SEC cases really run the gamut. We have some real bread and butter kinds of, you know, companies lying about their revenue. They claim they're making $50 million, and they're actually only making 25. And they're doing some fancy accounting to hide what's actually going on. And we also have had a, you know, I also personally do a number of cases under the Foreign Corrupt Practices Act, which is the law that forbids companies from bribing foreign officials for business purposes. And this is it's really interesting law for lots of reasons, one of which is that the SEC and the Department of Justice have joint jurisdiction over it. So the SEC have civil jurisdiction and DOJ has criminal jurisdiction. So the companies can be liable under both. And if there is a company that falls under the SEC jurisdiction, it can potentially fall within the SEC whistleblower program, because for an FCPA violation, and one of the reasons I really like these cases is because I come from a human rights background, and you know, almost never have a human rights or an environmental violation without also some sort of bribe to go along with it. And sometimes, it's frankly, easier to find the evidence and the proof of the bribe than it is to prove the human rights violation. And whatever it might happen to be. So it can be a way to hold companies accountable for bad acts abroad. So that's, that's one of my sort of favorite genre of cases that I work on. I also have cases related to, you know, investment advisors that are doing the wrong thing and leading their clients astray. These days, I have a lot of cases related to money laundering, there's a brand new money laundering whistleblower program, I run out of Department of Treasury. I know that's not what we're talking about today. But it's a really interesting program. And there's a lot of cases that crossed jurisdiction there with the AML program, and also the SEC, you know, companies that are not following through on their basic compliance checks that they have to do to make sure there's not dirty money passing through their systems. I does happen to be, you know, a genre of cases, I really like. These days, I was aware of a number of cases under companies, excuse me lying about ESG provisions. So, you know, making material misstatements to their investors about where they're at, in terms of their environmental, social, and governance standards. So those are, that's kind of the gamut. In terms of awards, you see some SEC whistleblower awards for a million dollars. And the rule with the SEC is you don't get a whistleblower award unless the SEC collects at least a million dollars. So you don't see a lot of very small whistleblower awards, because it just falls out from under the ground, but you'll see some at about the million dollar range. And you see some well over $100 million, I believe the largest SEC whistleblower award ever given was for $114 million, the SEC sister agency, the CFTC, just issued one for $200 million. So depending on the size of the enforcement action, and some of these are really big enforcement actions, particularly in the FCPA space, you're gonna see very, very large whistleblower awards.

Greg Williams: 22:37

So I just wanted to take a moment to explain from our perspective, what the significance is of the practice around ESG. For us, I think it represents the intersection of two really important things. One there, it's big business nowadays to sell and promote securities for companies that are making claims about their environmental, social and governance, cleanliness, goodness, performance, emphasis, and so on. And so there are a lot of companies spending a lot of money to promote the idea that they're doing well on these fronts, and I'm sure many of them are, in fact doing very, very well. But it raises the question, are they all doing very, very well. And then the other factor in the intersection is the enormous amount of money being spent by the federal government in the various infrastructure programs on environmental remediation and climate change mitigation. And so, you know, we can only imagine that a lot of that money is going to wind up going to companies that are promoting themselves on the basis of, of ESG standards. And this, this kind of case provides a mechanism for individuals to, to hold them to account for how well they are actually doing.

Poppy Alexander: 24:01

That's absolutely right. And, yeah, I could just interject for a second, I think you're also pointing to one of the reasons that whistleblowers are particularly important in this space, which is there such a massive information out there right now. And every company is jumping on the ESG bandwagon. And every company is promoting themselves, as you know, doing all sorts of wonderful things because they know investors care about it. And, you know, if you pull investors these days, most of them say they really care about it. And where how was the SEC supposed to know who's telling the truth and who's not. They really need people to point them in the right direction to know who they should be looking at and where they should focus their attention.

Dina Rasor: 24:44

Yeah, that that reminds me that and I think we're in the environmental and climate people. That's the light bulbs are by being going off in your head because the big fossil fuel especially big oil, The Big Oil has had longer to do it than others, but big fossil fuel they put on these commercials they put on this, they're that and what good corporate citizens they are. And, you know, Chevron talks about, you know, human energy. And, you know, we're all investing in the future. And you find out that these programs are actually very small, and not really compared to the amount of money they're doing, or the amount of pollution they're doing, or the amount of new wells they're drilling. And so I think that that is something that I've heard from almost every climate person, but they call greenwashing is very frustrating. Very frustrating for the for the climate people, because, you know, they might live in climate groups don't have the ability to get these Madison Avenue's slick ads on, you know, and so these, when these companies try to cure, I would think that this would be a great time, I know, if they say we're doing this kind of we have, you know, we're I think the net zero thing is one of the places where is a is a field that needs to be plowed. Because they they have constantly talking about net zero. And and I mean, I've just read examples, for example, they say, Well, you know, all our trucks and all the things we do to go pump the oil and get the oil out and do this and that that's all net zero, we're not adding to carbon, but you're pumping out, get oil that's going to be burned, which is going to make a heck of a lot more carbon than whatever you tried to do in this thing. So but people don't understand that. I mean, there are enormous amounts of climate, people screaming about that now, and how would you think that would work on this kind of thing, if you could show that the company claims they're putting x amount of money in but they're not or, you know, a lot of times the people who are supposed to carry out the good government, the good corporate citizen thing, are very frustrated, because they bring people in, and they say, okay, oh, good, I'm gonna I'm gonna have help Big Oil, you know, do the right thing. And then they're stuck in a situation where they're like, well, we're not really going to do that. So is that a good area? You think for this kind of thing? Because the because I'm sure they bragging on their SEC and to their stockholders, what they're doing.

Poppy Alexander: 27:25

I think it's a great area. I think it's a great area. And I think the SEC wants those cases. In fact, I don't think I know the SEC wants those cases, they've been very explicit with us that they want those cases. And, you know, we've seen that they've created new Enforcement Task Force on areas related to ESG fraud, we've seen that they've started issuing enforcement actions related to ESG fraud, and they're gung ho, they really are they want these cases, because they know that investors are making decisions based on this, when when a company makes a definitive statement about what they're doing to help the environment and they're not actually doing that. Or if they make a definitive statement about how little harm they're causing the environment, when actually they're causing a whole lot more harm. And an investor is making some sort of investment decision based on that. That's a huge deal. And particularly true now, where we have so many funds that are claiming they only invest in, in companies that can meet certain ESG standards well, so if those funds are investing in a company based on their statements about what they're doing to help the environment, they're not actually doing it, that's potentially a huge amount of money at risk and a huge amount of money going where it's not supposed to.

Dina Rasor: 28:39

So I would like to then say to all the all the climate advocates and people that I've talked and talked to her little Read, read about, in your frustration, in your frustration, of seeing this, if you think you've you know, they they really dig deep, some of these organizations really dig deep into the bowels of these companies and find it and may not even have to have a whistleblower just you can prove it just by public record. If you really think you have something, contact us climate money watchdog and we'll look at it and if we you know and talk about it, and then we you know, we can pass it on to Sarah or Poppy, then and the other other lawyers that do this, because I think yes, you would, you're not going to get instant gratification, but down the line, you're you're going to help the really throw a brick back and these people doing it. And when they flip figure out the SEC is after him that really I think they get very nervous. So they usually these big companies, and then at the end maybe you'll end up funding your group for a while. So you should think about you know, think about that. This is an opening that's just recent. That I see that I think I think is really good idea when I look at it, what other climate, things besides greenwashing, do you think that they they would lie about?

Poppy Alexander: 30:10

It's a good question. But first, I want to go back to why your points about instant gratification, I just I want to say that my ESG cases at the SEC right now are moving faster than any of my other SEC cases are good the enforcement team they have on ESG is really aggressive and really good. And they're doing what they need to do. So, you know, that's not to say these are fast cases, these are not gonna be fast cases, no cases fast. But they might move a lot quicker than you would think. Which is

Dina Rasor: 30:45

great. In other words, the government is the government is actually anxious in this area. So they won't, they won't be like feeling like their little kids having to clean the room. But instead, they're, you know, they're going to a party. I mean, I guess I see the government when you have a sexy case, they're just all gung ho, and when they when there's something that they know is going to take a lot of work, and there's going to be a lot of politics, and there's going to be a lot of pressure. This, you know, yeah, well, I'm not sure I see anything. So I've lived that. So this is very, I think this is very good news for the for the climate, people.

Poppy Alexander: 31:19

I think it is true. And I will say, you know, not to not to be forgotten, or also the s and the G factors, which, you know, frankly, I think are seen as a little bit fuzzier, but oftentimes are related to environmental issues as well, you know, to the extent that there's companies that are, for example, using child labor in the extractive industries and various forms, which we know happens all over the world. That's an environmental issue, that's also an social issue. And, you know, the SEC is interested in these kinds of cases, as well, to the extent that the company is then lying about how they're you, you know, what kind of labor practices they have, for example, or what kind of safety protections they have in place, or any of a number of other sorts of lies. So there's lots of other ways to creatively think about it, and think about what environmental crimes might be, besides just, you know, sort of focusing exclusively on climate, obviously, that's where so many of our focuses are right now. But there's, there's a whole lot of other environmental crimes going on.

Greg Williams: 32:22

So what are the geographic boundaries that the SEC is interested in? I mean, they regulate securities in the United States, but very often those securities are for companies that have operations around the world.

Poppy Alexander: 32:36

That's right. That's right. And jurisdiction is related to companies within their jurisdiction. So any any company that's traded on any of the US stock exchanges is within the SEC has jurisdiction. Some foreign companies that are traded, what we call over the counter or via pink slips are also within the SEC has jurisdiction that that one's a little bit more complicated analysis, it has to do with how many filings they provide, and disclosures and such. But generally speaking, we're looking at any company traded on the US stock exchanges. And whistleblowers can come from all over the world. And information can come from all over the world. And the bad acts can come from all over the world, for example, the SEC just issued one of its first really big ESG related enforcement actions against a Brazilian mining company for the collapse of a bridge in Brazil. And this case is really interesting to me for lots of reasons. But one of which is that they went after them for lying to investors about their ESG factor practices, and essentially lying about the risk of this bridge collapsing. And not sort of on a more straightforward securities fraud theory. They clearly wanted to make this case, an example. They wanted to put the focus on the ESG misrepresentations. And they want people to see that they're willing to go after these kinds of cases. And it's a really interesting case just came out a couple of months ago.

Greg Williams: 34:09

So in other words, while the SEC may not have the jurisdiction to regulate labor practices in Brazil, they do have the jurisdiction to regulate how you talk about it to potential investors in the United States. And so if you say that you have good labor practices in South America, Southeast Asia, Africa or other places where people may be economically disadvantaged, the SEC will take you to task for that.

Poppy Alexander: 34:37

That's right. That's right. And at least potentially, they will. And same thing goes for, you know, foreign companies that are trying to raise money from US investors. If you come to the US, and you do a bunch of investor roadshows, and you go around and you talk to all these US investors about why you should invest in their particular company, the SEC may have jurisdiction over you as well. And the SEC has As you know, to get into the legal nitty gritty for a second, the SEC has a much broader foreign jurisdiction, jurisdiction over foreign companies than for example, private shareholders trying to bring securities lawsuits against foreign companies. It's different, and the SEC has more power in this area.

Dina Rasor: 35:21

Okay, now, you were telling me before that the SEC is a new program, but 10 years that might sound long time, but in law, that's glacial laws glacial and, but there are new SEC Rule changes and sort of a defibrillation. I've read several articles that have started in September 2020. And if these changes made it easier or harder for whistleblowers to file

Poppy Alexander: 35:51

their September 2020 amendments in there, there's now some proposed amendments just as a few months ago to change the 2020 amendments or there's sort of a mixed bag, um, some of them are very much directed at recognizing they had a real problem with how long it was taking, for award determinations to happen, and trying to fix that and make it shorter. And some of them were they got a little scared about how large some of the whistleblower awards were. And so they wanted to, you know, put a cap on that, because there was some sort of general sense that you shouldn't make a certain amount of money or something with, you know, isn't really frankly, naive. whistleblowers are taking a massive, massive risk, some safety risk, often a personal risk, and generally an employment risk and coming forward and telling the SEC about it. And, you know, we sometimes talk about whistleblower rewards as insurance, it's essentially unemployment insurance, because you're probably never going to work for the company, you know, you're definitely never working for the company, again, you're probably never working in your chosen industry again. And so it was a reward provides you with a form of menial unemployment insurance that's gonna get you through the rest of your life. And so it's really, from that perspective, seeing these sort of larger awards, they don't seem all that large anymore. So we we've now seen in the 2022 proposals from Commissioner Gensler, who really understands the value of whistleblowers and has done a lot to promote the whistleblower program, saying that they are considering essentially providing some flexibility in determining award percentages to the enforcement team. With the caveat, they will always be to raise an award not to lower it. So I think I think there's a real recognition that that sort of moment of somewhat anti whistleblower anxiety, let's say, is not the right direction for the program. And it again, to get back to what I said earlier, the SEC knows all their best cases come from whistleblowers, I've heard multiple commissioners and multiple senior enforcement people say that over and over and over again, they know whether information is coming from, they want to do everything they can to encourage them.

Dina Rasor: 38:13

Okay, and in when you talk about whistleblowers, I know that in in qui tam law, although it took a long time for this to be acceptable. You don't have to have you can have a single relator, several relators. But there are also been organizations that come in, and do the qui tam are usually you always have another relator in case for some reason, some judges like that part of it, it's so good, I think, is the SEC hat. Does it have to be one person two people? Or can it be one person and a group that, you know, like? I'm sure there's tons of organizations that have investigated Big Oil, can they can they do that tip twos and it's a nonprofit organization.

Poppy Alexander: 39:01

So that is one of the ways for the SSA program differs from kitan lawsuits, you have to be a natural person, you can be multiple natural people. But you have to be a natural person, so cannot be an organization as a whistleblower. That's part of the regulations on however, what we have seen is something like, you know, the head of an organization coming forward and sort of stepping into the shoes as the whistleblower or something like that. So there are certainly ways we don't see that as a particularly large limitation on the program. And but

Dina Rasor: 39:33

it is one and there's no restrictions on how you if you get an award for $10 million, and you take 1 million yourself and give 9 million to the organization that helped you do this. There's they're not going to come after that.

Poppy Alexander: 39:47

No, no, not at all. I mean, what we what we tell our clients is when we get the cheque into our trust account, we will send it wherever you tell us to send it. Oftentimes our clients want us to write into our retainer. agreement that, you know, they will be keeping 5% of the award and the rest will be going to x y&z organization. Great, fine, we're very happy to write that into our retainer agreement. But also we will send the money wherever you tell us to send it. So that is, there's no problem with that at all.

Dina Rasor: 40:17

Okay, and we are probably not going to be able to do the in depth on this. And perhaps this is another whole podcast, but the IRS has a whistleblower program. And I haven't seen people as excited about it. I've not looked into it in detail, because I believe and is it harder or easier to file successful case with the IRS?

Poppy Alexander: 40:40

You're not going to find me all that excited about it either. I'm sorry to say, um, the IRS program has some real problems they need to solve. And you know that the optimistic and frankly, True statement is the IRS program has the possibility to be the most powerful program in the country. And we have a massive problem with tax avoidance in this country, some of which is legal, and there's nothing the IRS program can do about that. But a lot of which is either, you know, we have people offshoring their income to hide it from the IRS, we have people you know, hiding income through series of shell corporations, we have all sorts of different ways that they people scheme, the IRS, we have people sending up fake nonprofits and nonprofits you

Dina Rasor: 41:26

wonder who does that kind of stuff.

Poppy Alexander: 41:30

Exactly. And, and, you know, to, for example, greenwash the corporate corporations, image, we also have, you know, we have all sorts of problems like that, the IRS, for whatever reason, Cultural Historical, personality, I don't know what does not like whistleblowers the way that the SEC program does. And that's just unfortunately, a sad truth of it. And they do not quite get the value of whistleblowers and show that has consequences and that they don't work with whistleblowers in quite the same way. So if you file essentially, it looks the same as what we filed with the SEC, except for it's about tax information instead of about, you know, it's security fraud. It's not called a tip, it's called a Form 211. But other than that, it basically looks the same, but we file it, and it goes into a black box. And if we're lucky, we don't hear anything for seven to 10 years, and then they tell us whether our tip is successful or not. I mean,

Dina Rasor: 42:39

10 years are really, really I didn't that, that. I don't know that many bleaching cases that have been under seal that

Poppy Alexander: 42:46

long. I hate to say it, some are even longer. I know some okay, I believe in the most recent IRS whistleblower report, they said somewhere over a dozen years old and still pending. And if you're unlucky there, the IRS is now working to actually reject even more cases at sort of the offset in sort of their initial filtering program, which means it doesn't even ever get to the field doesn't even get to attain to, you know, sort of look deeply at it through subject matter expert in such in those cases can be rejected very quickly. Obviously, that's not good. So we have a real problem with the IRS program right now. i My sympathetic read on it is that the IRS is just so horrifically underfunded. They just don't have the resources. And for whatever reason, they don't see whistleblowers as force multipliers, which is what the good DOJ attorneys understand them to be. And that's what the SEC understands them to be right. We're here to do work for you. We're you know, you have trained lawyers and and whistleblowers, who are experts in whatever it is, they're experts in, and we're here to do your work for you. And we're here to help you, and IRS just doesn't quite seem to get it. And the one exception to that I'll say is the cases that are criminal for whatever reason, then go to the criminal investigations team seem to be doing better with the IRS. They do the criminal investigations team seem to understand the value of whistleblowers, and maybe that's because they're used to working with informants or what have you. But otherwise, we have a we have a we have a real issue.

Dina Rasor: 44:25

Greg, do you have any questions before I ask her the last one?

Greg Williams: 44:31

I've been waiting for you to ask that. So go ahead. Okay,

Dina Rasor: 44:35

I asked this almost to everybody. Because it's in sometimes people are a little stumped. But if you are queen, queen for the day and purse for a day, whatever. What would you change about the SEC whistleblower and make it work better is your you're in the thick of it.

Poppy Alexander: 44:53

So it's right now, too much? The success of an SEC whistleblower case depends on Um, who the enforcement attorney is, frankly, there's some very, very good enforcement attorneys out there who are very open and communicative and talk to us and, you know, make sure that things are moving forward, and really are working to keep us informed. And, you know, understand, I mean, to the extent that can, which, frankly, is not all that much, but at least it's something. And that's great. But there, there are some SEC enforcement attorneys that don't fall into that for whatever reason. And, um, you know, I think something that I would really like to see the whistleblower office generally do is create sort of a better feedback mechanism to make sure that there is some someone sort of working directly with the whistleblower that sort of help things move along, make sure that we're there sort of regular check in progress and such. Because that's, that's kind of missing. And so right now, it really does. It's a little too dependent on the personality of whoever you're working with. Yeah.

Dina Rasor: 46:02

And then I wanted to ask you that is it like, like, in criminal cases, you're like, what, what Judge you draw? Is it is it just it you don't have really any control over which agent or investigator is going to be assigned? So it's a crapshoot?

Poppy Alexander: 46:20

You know, we, you know, we are one of the largest whistleblower firms in the country, we have a ton of cases with the SEC. And so we know the personalities of a lot of the enforcement attorneys, we have favorites. And so we will call our favorite enforcement attorneys and say, Hey, we're about to, you know, we're about to file this submission, grab it. And because they have a system where they can sort of grab submissions, and that generally works, but sometimes it does, for whatever reason, maybe we're bringing a totally novel theory that we don't we really don't know who the right person is at the SEC did to look at it, maybe you know, the people we wanted to look at are too busy, or what have you. So it's not it's not a perfect system, but it is a little bit better than just the, you know, you get assigned the random jobs and you're, you're stuck with whoever you

Dina Rasor: 47:08

start with? Well, then is there anything that you that we've left out that you'd like to talk about, that you think's important?

Poppy Alexander: 47:16

I really do think that climate is the next frontier in the SEC, I think we're going to see a huge wave of cases there. I know they want them. And, you know, I know we want them, and I have a number of colleagues who also want them. And I think that it's just something we're going to see a lot of, and, you know, it obviously this case does take a while to filter through systems. So maybe not this year, maybe not even next year, but starting in a couple of years from now, we're gonna start seeing a lot of enforcement actions on this space.

Dina Rasor: 47:50

Okay, and how many, you know, people come through your door? How many cases do you usually take percentage wise, you know, is it there's, are there a lot of ones that come through the door, you know, is bigger than Watergate? And there really isn't much there?

Poppy Alexander: 48:05

Yeah, you know, we are we, for a lot of the reasons that we talked about earlier, it's hard to be a whistleblower, we're not going to put anyone through the process, unless we think there's a really good shot, that their case is going to be successful, it's not worth their time, it's not worth our time. It's just not worth anyone's time. And we take approximately 100 cases that come to us. And that's because, you know, there's a lot of cases that come in that, you know, maybe it's really bad fraud, but it just doesn't fit in one of the various whistleblower programs, we have our our programs are so powerful, but they're all frankly, kind of narrow in different ways. And so we have to fit it, whatever the particular fraud is into one of the programs we have. So there's a, there's a bunch of cases that fall into that, then there's a bunch of cases that are frankly, a little too small, and we just know, the government's not going to be that interested. And then we you know, we get a lot of cases where people are reporting really bad stuff, you know, really, really bad stuff. But unfortunately, it's just not really fraught. It's something else. And we obviously help those people find the kind of legal representation they need, whether it's an employment lawyer or, you know, consumer products attorney, or what have you. So, you know, we always we always do our best to try to help everyone who comes to us to the extent we can.

Greg Williams: 49:24

Well, we certainly share your concern. And we hope that as many of these cases that do surface are brought to somebody's attention that especially an organization is competent is yours, and we hope that you will come visit with us again, in the future and especially as hopefully some of these cases close and you're able to discuss some of the details with us.

Poppy Alexander: 49:49

Absolutely. Yeah, absolutely. This was such a

Dina Rasor: 49:51

way to get you when you get your first big case and SEC call us up and we'll have you explain because it's it's one thing to talk about it we're you know, I'll talk about it And theoretically, now it's new, it's still in flux. But boy, when you have a case that's finally done, and you can talk about it, and you can kind of say, Here's, you know, watch the journey that really gives other people an idea, you know, you can tell them people, this is going to be tough, but, or this is gonna be as or you got to be patient. But if you if you have a test case like this, where people can understand and that was successful, I think then, so I want to iterate again, that anybody thinks they have something like this, contact us that climate money watchdog.org Send us an email either, and we have ways that you can contact us so you can also not have what you're telling us out on the internet. And it's have secure ways of doing that. And that's why we made this organization we are trying to educate the public now. But we we see ourselves as a place for climate whistleblowers to come because I sure papi understands that sometimes you get whistleblowers who don't ask ahead of time and go try to do things themselves and get into this horrible muck. And then they come to you and like, you know, Clean up on aisle five. And it's a lot harder to try to fix that. Then if they come to you right from the beginning. You say no, you can't do that. Yes, you can do this. Make sure you do that, you know, kind of thing. So if you come to us and you know, we think that you've got a case we will find you good lawyers, like Bobby.

Poppy Alexander: 51:32

Well, thank you again for having me. This was so much fun.

Unknown: 51:35

Yeah. More importantly, thank you very much for the work that you do. Yeah,

Poppy Alexander: 51:40

you too.