Corporate Law

Fired general counsel can target individual directors in whistleblower suit, federal judge rules

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A fired general counsel can name directors of the company that formerly employed him as individual defendants in a whistleblower suit, a federal judge has ruled.

However, plaintiff Sanford Wadler can actually sue only the chief executive of Bio-Rad Laboratories under the Sarbanes-Oxley Act in the San Francisco case, ruled U.S. District Judge Joseph Spero. That’s because Wadler didn’t name the directors as defendants until after a deadline had expired, reports Courthouse News.

The defense had argued that directors could not be named as defendants because the statute didn’t expressly say that a plaintiff could do so. But Spero said allowing directors to face suit was in accord with the intent of Congress in enacting the law.

Wadler alleges in the suit that he was “abruptly fired” in 2013 because he refused to go along with a claimed cover-up of a Chinese bribery scheme, according to Courthouse News and The Recorder (sub. req.). He had been the company’s general counsel for more than 20 years.

The company agreed in 2014 to pay $55.1 million to the U.S. Department of Justice and the U.S. Securities and Exchange Commission in exchange for their agreement not to prosecute Bio-Rad for allegedly violating the Foreign Corrupt Practices Act concerning payments to Russian, Thai and Vietnamese officials. Law 360 (sub. req.), Reuters, the San Jose Mercury News and the Wall Street Journal (sub. req.) had stories at the time.

Bio-Rad self-reported the conduct at issue and cooperated in the investigation. Of the $55.1 million, almost $41 million represented disgorgement and interest paid to the SEC and the remainder was for DOJ fines.

DOJ and SEC news releases provide additional details.

Related coverage:

Courthouse News: “Firm Denies Fired VP Is a Whistleblower”

See also:

Law 360 (sub. req.): “Bio-Rad Investor Demands Books In Wake Of $55M FCPA Deal”

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