Gaming Concern That Fired Whistle-Blower to Pay $500K

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By Phyllis Diamond

Sept. 29 — International Game Technology will pay half a million dollars for allegedly terminating an employee with years of positive performance reviews because he told senior management and the SEC about possible irregularities in the gaming concern's financial statements ( In re Int'l Game Tech., SEC, Admin. Proc. File No. 3-17596, 9/29/16 ).

The case is the agency's second whistle-blower retaliation case since the Dodd-Frank Act gave it authority to bring such lawsuits, and its first standalone anti–retaliation action.

"Bringing retaliation cases, including this first stand-alone retaliation case, illustrates the high priority we place on ensuring a safe environment for whistleblowers,” Jane Norberg, newly appointed chief of the SEC’s Office of the Whistleblower, said in a release. "We will continue to exercise our anti-retaliation authority when companies take reprisals for whistleblowing efforts."

Steady Flow

Notwithstanding the agency's commitment to whistle-blower protection, New York whistle-blower lawyer Jordan Thomas, Labaton Sucharow LLP, said he wasn't surprised the commission has brought only two anti-retaliation cases so far.

In most cases, the SEC typically will investigate all possible securities violations and then decide on the appropriate course of action, Thomas told Bloomberg BNA. He said it takes two to four years to complete an investigation and there may be cases in which the commission has investigated retaliation, but is still investigating accounting fraud or other possible misconduct.

“I suspect in the coming years you're going to see a steady flow of retaliation cases and they will grow in number,” Thomas said. “This is the beginning of a much bigger wave of retaliation cases that we will see.”

The SEC didn't respond immediately to an e-mailed inquiry regarding whether there are more anti-retaliation cases in the pipeline.

Employee Fired

In this case, the employee—who wasn't identified in the complaint—was removed from significant work assignments within weeks of raising concerns about the company's cost-accounting model. He was fired approximately three months later, the SEC said.

In the agency's first anti-retaliation case, in June 2014, hedge fund adviser Paradigm Capital Management Inc. settled allegations it retaliated against its head trader for tipping off the commission about certain improper principal transactions (116 Securities Law Daily, 6/17/14). Thomas represented the whistle-blower in that action.

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To contact the editor responsible for this story: Seth Stern at

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