SEC Whistleblower Files Retaliation Lawsuit Against FirstEnergy Corp

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US SEC voted for the amendment of the whistleblowing program 

A whistleblower whose disclosure led to the opening of a U.S. Securities and Exchange Commission (SEC) investigation earlier in 2020 filed a retaliation lawsuit against Akron utility company FirstEnergy Corp. On October 18, attorneys for whistleblower Michael Pircio filed the lawsuit in the U.S. District Court for the Northern District of Ohio, according to Cleveland.com. Pircio alleges that FirstEnergy retaliated against him for making a protected whistleblower disclosure to the SEC.

Pircio worked as an auditor at Clearsulting, a Cleveland consulting firm that assisted FirstEnergy with an internal audit. According to the filings, Pircio examined the audit of FirstEnergy following the indictments of former Ohio House Speaker Larry Householder and four others. Householder was indicted in July 2020 on racketeering charges involving a $60 million bribe related to the passage of a $1.3 billion bailout bill for two nuclear power plants that had been owned by FirstEnergy for several years. According to the filings, Pircio downloaded information from Clearsulting’s audit of FirstEnergy, observed potential securities violations, and forwarded the information to the SEC.

The SEC subsequently opened an investigation into FirstEnergy. The exact scope of the investigation is unknown. The investigation became public knowledge when attorneys for FirstEnergy and Clearsulting filed a lawsuit against Pircio in September. The lawsuit alleges that Pircio downloaded and shared confidential records that were unrelated to his work. Pircio allegedly downloaded the documents after he was fired by Clearsulting for unrelated reasons.

The lawsuit filed by Pircio’s attorneys is a countersuit. It alleges that Pircio’s former employers are targeting him because of his whistleblowing. The filings claim that FirstEnergy and Clearsulting’s lawsuit contains information that revealed Pircio’s identity as an SEC whistleblower, thus violating his rights to confidentiality and jeopardizing his ability to obtain employment.

The SEC Whistleblower Program was established with the passage of the Dodd-Frank Act in 2010. The program offers a number of anti-retaliation protections to whistleblowers who disclose potential securities violations to the SEC. These protections include confidentiality provisions meant to ensure that whistleblowers face no blowback from former, current, or potential future employers. The protections additionally restrict employers from terminating or discriminating against employees who make protected disclosures to the SEC.

In addition to anti-retaliation provisions, the SEC Whistleblower Program offers monetary awards to qualified whistleblowers. Individuals who voluntarily provide original information to the SEC that leads to a successful enforcement action are entitled to an award of 10-30% of funds recovered by the government. Since issuing its first award in 2012, the SEC Whistleblower Program has awarded over $562 million to 107 individuals.

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