WASHINGTON, Sept. 29, 2016 /PRNewswire/ -- The U.S. Securities and Exchange Commission (SEC) announced on September 29, 2016 that International Gaming Technology (IGT) agreed to pay a $500,000 penalty to settle charges of unlawfully retaliating against one of its executives who raised repeated concerns about IGT's accounting practices. According to the SEC's complaint, IGT fired the executive because he reported to senior management and the SEC that the company's financial statements might be distorted. The whistleblower, represented by Alexis Ronickher and Lisa J. Banks, partners with Katz, Marshall & Banks, LLP, a boutique D.C.-based whistleblower and employment law firm, has elected to maintain his anonymity, a right expressly granted under the Dodd-Frank Act.
This is the first time the SEC has brought an enforcement action against a company for unlawful retaliation without charging underlying securities violations. The SEC's authority to prosecute anti-retaliation violations is based on its implementing regulations of Section 922 of the Dodd-Frank Act. Remarking on the significance of the SEC's enforcement action, Ms. Ronickher noted, "The SEC's willingness to take action against a publicly traded company irrespective of whether it chooses to bring an enforcement action based on the whistleblower's tip is an extremely significant development. It sends a strong message both to publicly traded companies and to their employees that the SEC is serious about protecting whistleblowers."
International Gaming Technology Wrongfully Terminated Whistleblower For Reporting Potential Securities Violations To The SEC
In the fall of 2013, the whistleblower, an IGT executive, discovered that the Company had a potential accounting problem that appeared to inflate the costs of one of the business segments, which he believed might constitute a securities violation. Over the next 10 months, he repeatedly reported the problem to his supervisor and to IGT's Chief Operating Officer (COO). By the summer of 2014, the COO was so angry about these reports that he attempted to fire the whistleblower. He failed, however, when the whistleblower learned about his imminent termination and reported both the potential securities violations and the unlawful retaliation to the Company's compliance department, as well as the SEC. The Whistleblower's compliance report triggered an internal investigation, during which the Company learned of his SEC report. Less than two months later, he met with IGT representatives who told him that the Company's investigation did not substantiate his report. Moments later, they fired him. In only three months, the whistleblower had gone from a high-performer with years of positive performance reviews to being the victim of a retaliatory termination, as the SEC expressly concluded.
The whistleblower also has a charge asserting unlawful retaliation in violation of the Sarbanes-Oxley Act of 2002 (SOX), 18 U.S.C. § 1514A, under investigation before the U.S. Occupational Safety and Health Administration (OSHA). Ms. Ronickher and Ms. Banks have represented the whistleblower throughout the SEC investigation and continue to represent him before OSHA and with all matters related to his employment claims.
According to Ms. Banks, "After a two-year investigation, the SEC felt strongly enough about the evidence in this case to pursue a landmark, standalone enforcement action charging IGT with engaging in unlawful retaliation. Our client is pleased with the outcome of the SEC's investigation and looks forward to the same conclusion being reached by OSHA on his pending SOX claim."
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SOURCE Katz, Marshall & Banks, LLP