Van v. JP Morgan Chase & Co. (agency decision, November 5, 2024)

Plain-English summary

Amy Van alleged that JP Morgan Chase retaliated against her after she reported customer-identification, anti-money-laundering, and internal-control concerns. An administrative judge dismissed her Sarbanes-Oxley Act and Consumer Financial Protection Act claims for failing to allege protected activity. The Board held that administrative whistleblower complaints need only give fair notice, a lower threshold than proving the claims or satisfying a heightened federal-court pleading standard. Van's allegations connected her reports to possible wire fraud, an SEC internal-control rule, and unfair, deceptive, or abusive consumer-finance practices. Those allegations were enough to survive dismissal when read in her favor. The Board reversed and remanded for the judge to identify the protected-activity allegations and conduct evidentiary proceedings.

Decision snapshot

• Cited authorities: 18 U.S.C. § 1514A; 12 U.S.C. § 5567; 29 C.F.R. § 18.70(c)
• Outcome: Dismissal reversed and SOX and CFPA retaliation claims remanded for further proceedings.
• Key point: A DOL whistleblower complaint survives dismissal when it gives fair notice connecting alleged protected reports to a covered law; evidence proving the allegations is not required at that stage.

Full text (DOL official public release)

    U.S. Department of Labor          Administrative Review Board
                                      200 Constitution Ave. NW
                                      Washington, DC 20210-0001



    IN THE MATTER OF:


    AMY VAN,                                    ARB CASE NO. 2023-0018

                COMPLAINANT,                    ALJ CASE NO. 2022-SOX-00028
                                                ALJ WILLIAM P. FARLEY
         v.
                                                DATE: November 5, 2024
    JP MORGAN CHASE & CO., et al.,

                RESPONDENT.


Appearances:

For the Complainant:
      Thad M. Guyer, Esq. and Stephani L. Ayers, Esq.; T.M. Guyer and
      Ayers & Friends; Medford, Oregon

For the Respondent:
      Michael D. Schissel, Esq. and Pamela E. Safirstein, Esq.; Arnold &
      Porter Kaye Scholer, LLP; New York, New York

Before HARTHILL, Chief Administrative Appeals Judge, and WARREN,
Administrative Appeals Judge


              DECISION AND ORDER REVERSING AND REMANDING

WARREN, Administrative Appeals Judge:

     This case arises under Section 806 of the Corporate and Criminal Fraud
Accountability Act of 2002, Title VIII of the Sarbanes-Oxley Act (SOX),1 its
implementing regulations,2 and the Consumer Financial Protection Act of 2010,

1       18 U.S.C. § 1514A.
2       29 C.F.R. Part 1980 (2024).
                                               2


Section 1057 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of
2010 (CFPA),3 and its implementing regulations.4 Complainant Amy Van
(Complainant or Van) filed a complaint against Respondent JP Morgan Chase & Co.
(Respondent or JP Morgan & Chase) alleging that JP Morgan & Chase terminated
her employment and took other adverse actions against her in violation of the
whistleblower protection provisions of SOX and the CFPA. On January 20, 2023, a
Department of Labor Administrative Law Judge (ALJ) issued an Order Granting
Respondent’s Motion to Dismiss (Order). Van appealed the matter to the
Administrative Review Board (ARB or Board).

       On appeal, the Board must determine whether the ALJ erred in dismissing
Van’s complaint. A complaint under SOX and the CFPA only needs to provide “fair
notice” of the claim.5 We agree with Van that the allegations in her July 27, 2022
Restated Complaint meet this lenient standard—she provided fair notice that she
engaged in protected activity under SOX and the CFPA when she disclosed
violations regarding JP Morgan & Chase’s Customer Identification Program (CIP)
to her supervisors and corporate management. We therefore reverse the January
20, 2023 Order and remand the case for further proceedings consistent with this
decision.

                                      BACKGROUND

      On April 2, 2021, Van filed a complaint with the Occupational Safety and
Health Administration (OSHA) alleging that JP Morgan & Chase violated the
whistleblower protection provisions of SOX and the CFPA.6 On July 26, 2022,
OSHA issued findings that JP Morgan & Chase provided “clear and convincing
evidence” that it terminated Van’s employment for violating its Code of Conduct
and there was therefore no reasonable cause to believe that Respondent violated the
CFPA and SOX.7

       On July 27, 2022, Van filed a request for a hearing before the Office of
Administrative Law Judges (OALJ), attaching a 30-page Restated Complaint.8 She
stated that, as a Relationship Banker and Small Business Specialist, she had
Financial Industry Regulatory Authority (FINRA) qualifications and received on-
the-job training to understand federal regulations requiring JP Morgan & Chase to

3     12 U.S.C. § 5567.
4     29 C.F.R. Part 1985 (2024).
5      Evans v. EPA, ARB No. 2008-0059, ALJ No. 2008-CAA-00003, slip op. at 9 (ARB
July 31, 2012).
6     See OSHA Complaint (Apr. 2, 2021).
7     See OSHA determination letter (July 26, 2022).
8     Respondent’s (Resp.) Brief (Br.) at 3.
                                              3


implement and continually monitor a written Know Your Customer (KYC) process.9
As a publicly traded company and a registered bank regulated by the Securities and
Exchange Commission (SEC), JP Morgan & Chase was subject to U.S. federal
banking and securities laws.10 Van explained that the KYC process, designed to
prevent financial crimes or misconduct by both customers and employees, required
a CIP for the company’s anti-money laundering compliance program.11 The process
also involved Customer Due Diligence (CDD) procedures aimed at preventing
money laundering and financial fraud.12 Van alleged that JP Morgan & Chase’s
account managers were inadequately trained in CDD procedures, often collecting
customer information without conducting thorough risk assessments before opening
accounts.13

       Van asserted that she engaged in several protected activities by reporting
KYC and CIP violations to her supervisors and escalating these concerns to
corporate management.14 She indicated that she disclosed possible fraud, reported
other employees’ mistakes, filed a Suspicious Activity Report (SAR), prevented the
use of altered documents in JP Morgan & Chase’s course of business, identified
possible false customer identities, reported citizen issues, reported management
hostility to an in-house attorney, reported the lack of regulatory enforcement,
reported the unauthorized use of a messenger app and unapproved translators by
employees, reported regulatory issues internally, provided evidence to the Office of
the CEO, and made a report to JP Morgan & Chase’s employee relations
department.15 Van detailed approximately fifteen specific instances of potential
KYC and CIP violations involving JP Morgan & Chase employees and both
prospective and current customers.16

       Van claimed that, in retaliation for her making KYC-CIP protected
disclosures, JP Morgan & Chase “subjected her to an increasingly hostile work
environment” and launched an investigation into her for allegedly stating she
wanted to harm her former supervisor.17 She further alleged that JP Morgan &
Chase placed her on paid administrative leave, changed the locks to her office,


9     Order at 3; Restated Complaint at 3, 5.
10    Restated Complaint at 4.
11    Id. at 17, 19; 31 C.F.R. § 1020.220(a)(2).
12    Order at 3; Restated Complaint at 6.
13    Restated Complaint at 6.
14    Id. at 9; Order at 3-4.
15    Order at 4.
16    Restated Complaint at 7-14.
17    Id. at 14-15; Order at 4.
                                             4


terminated her employment on October 30, 2020, and submitted a false statement
in a U5 form with FINRA.18 Van explained that the U5 form, a “Uniform
Termination Notice for Securities Industry Registration,” has prevented her from
securing employment in her field since its filing.19

      On November 7, 2022, the ALJ held a pre-hearing conference, and JP Morgan
& Chase stated that the case should be dismissed.20 On November 10, 2022, JP
Morgan & Chase filed a Summary of Its Motion to Dismiss alleging that the
complaint failed to state a claim upon which relief could be granted.21 JP Morgan &
Chase contended that Van failed to describe any fraudulent scheme related to wire
or mail fraud that she reasonably believed occurred under SOX.22 It also asserted
that Van failed to allege that she reasonably believed that JP Morgan & Chase was
engaged in unfair, abusive, and deceptive practices against its clients in violation of
the CFPA or that JP Morgan & Chase violated any of the enumerated statutes
within the Consumer Financial Protection Bureau (CFPB)’s jurisdiction.23 On
November 11, 2022, Van filed “Complainant’s Position on the Motion to Dismiss”
arguing that “[t]he Restated Complaint alleges whistleblower retaliation” under
SOX and the CFPA.24 She explained that OSHA does not apply federal court
pleading standards to its complaints and that the proper pleading standard to apply
was the “fair notice” pleading standard set forth in Evans v. E.P.A.25 The ALJ held a
hearing on the motion to dismiss on November 21, 2022.26

       On January 20, 2023, the ALJ granted Respondent’s Motion to Dismiss and
determined that Van failed to allege that she engaged in protected activity covered
under SOX or the CFPA.27 The ALJ concluded that Van failed to make allegations
in the Restated Complaint that met the requirements of a SOX claim.28 He
summarily determined that “the factual allegations do not meet the criteria of
Section 806 claims under section: (1) 1341 mail fraud; (2) 1343 wire fraud; (3) 1344

18     Order at 4; Restated Complaint at 15-16.
19     Restated Complainant at 16.
20     Order at 1.
21     Id.
22     Resp. Summary of Motion to Dismiss at 3.
23     Id. at 6.
24     Order at 2; see Comp.’s Position on Motion to Dismiss at 2.
25      Comp.’s Position on Motion to Dismiss at 1-2 (citing Evans, ARB No. 2008-0059, slip
op. at 9).
26     Hearing Tr. at 1.
27     Order Granting Respondent’s Motion to Dismiss (ALJ Jan. 20, 2023).
28     Order at 5.
                                            5


bank fraud; or (4) 1348 securities fraud,” and that as a result Complainant had not
alleged an enumerated fraud statutes violation as defined by 18 U.S.C. §
1514A(a).29 The ALJ likewise summarily determined that Van failed to allege that
she engaged in protected activity under the CFPA “pursuant to any of the 18 laws
within the Consumer Financial Protection Bureau’s jurisdiction.”30 Accordingly, the
ALJ dismissed Van’s complaint under SOX and the CFPA. 31

      On January 26, 2023, Van appealed the ALJ’s Order to the Board.

                      JURISDICTION AND STANDARD OF REVIEW

       The Secretary of Labor has delegated authority to the ARB to hear appeals
from ALJ decisions and issue agency decisions in cases arising under SOX and the
CFPA.32 The ARB reviews de novo an ALJ’s order on a motion to dismiss.33 In
ruling on a motion to dismiss, the ALJ and the ARB “must view the evidence, along
with all reasonable inferences, in the light most favorable to the non-moving
party.”34

                                      DISCUSSION

1. Motion to Dismiss Standard

       The Rules of Practice and Procedure for Administrative Hearings Before the
Office of Administrative Law Judges allow a party to move to dismiss part or all of
the matter for failure to state a claim upon which relief can be granted.35 In
Sylvester, the ARB held that because federal litigation materially differs from
administrative whistleblower litigation within the Department of Labor, it would
apply a less stringent legal standard for stating a claim in a SOX complaint filed in




29    Id.
30    Id. at 6.
31    Id.
32     See Secretary’s Order No. 01-2020 (Delegation of Authority and Assignment of
Responsibility to the Administrative Review Board (Secretary’s discretionary review of ARB
decisions)), 85 Fed. Reg. 13,186 (Mar. 6, 2020); 29 C.F.R. §§ 1980.110(a), 1985.110(a).
33    Bauche v. Masimo Corp., ARB No. 2022-0035, ALJ No. 2022-SOX-00010, slip op. at 4
(ARB Sept. 27, 2022) (citation omitted).
34     Id. at 5 (citing Garvey v. Morgan Stanley, ARB No. 2020-0034, ALJ No. 2017-SOX-
00030, slip op. at 2-3 (ARB July 16, 2021)).
35    29 C.F.R. § 18.70(c).
                                             6


an administrative proceeding.36 The ARB further articulated this lower pleading
standard in Evans, in which it established that to survive a motion to dismiss in an
administrative proceeding before an ALJ, a complainant need only provide “fair
notice” of their claim.37 A complainant provides “fair notice” by articulating:
“(1) some facts about the protected activity, showing some ‘relatedness’ to the laws
and regulations of one of the statutes in our jurisdiction, (2) some facts about the
adverse action, (3) a general assertion of causation, and (4) a description of the relief
that is sought.”38 When evaluating whether a complaint meets the “fair notice”
pleading standard, the focus is “solely on the allegations in the complaint, its
amendments, and the legal arguments the parties raised—not whether evidence
exists to support such allegations.”39 Accordingly, we evaluate Van’s complaint to
determine whether it provided fair notice of the alleged protected activity under
SOX40 and the CFPA.41

2. The July 27, 2022 Restated Complaint Provided Fair Notice of Protected
   Activity Under SOX

       A. Burdens of Proof Under SOX

       The employee-protection provisions of the SOX prohibit covered publicly
traded companies and certain related entities from retaliating against employees
who provide information or assist in investigations related to certain fraudulent
acts.42 To establish a whistleblower claim under SOX, an employee must prove by a
preponderance of evidence that (1) they engaged in protected activity; (2) the
employer took adverse action against them; and (3) the protected activity was a




36      Sylvester v. Parexel Int’l, Inc., ARB No. 2007-0123, ALJ Nos. 2007-SOX-0039, -0042,
slip op. at 13 (ARB May 25, 2011).
37     Evans, ARB No. 2008-0059, slip op. at 9.
38     Id.
39     Id. at 10.
40     Bauche, ARB No. 2022-0035, slip op. at 15-18 (applying the “fair notice” pleading
standard to a SOX complaint when determining whether the ALJ properly granted
dismissal of the claim).
41     When promulgating the CFPA regulations, the Department of Labor expressly
rejected the heightened federal pleading standard at the complaint stage. See Department
of Labor Rules and Regulations: Procedures for Handling Retaliation Complaints Under the
Employee Protection Provision of the Consumer Financial Protection Act of 2010, 29 C.F.R.
Part 1985, 81 Fed. Reg. 14,374, 14,377 (Mar. 17, 2016).
42     See 18 U.S.C. § 1514A.
                                            7


contributing factor to the adverse action.43 If the employee establishes these
elements, the employer may avoid liability if it can prove by clear and convincing
evidence that, in the absence of the protected activity, it would have taken the same
adverse action.44

       B. Protected Activity Under SOX

       An employee engages in protected activity under SOX if they provide
information or otherwise assist in an investigation regarding any conduct which the
employee reasonably believes to be a violation of: section 1341 (mail fraud), 1343
(wire fraud), 1344 (bank fraud), or 1348 (securities and commodities fraud), any
rule or regulation of the Securities and Exchange Commission (SEC), or any
provision of Federal law relating to fraud against shareholders.45

       In the January 20, 2023 Order, the ALJ determined that Van failed to make
allegations that “meet the requirements of a SOX claim,” specifically the criteria of
Section 806 claims for mail fraud, wire fraud, bank fraud, or securities fraud.46 The
ALJ, however, erroneously held Van’s complaint to a higher standard than what is
required at the pleading stage. To survive a motion to dismiss under 29 C.F.R. §
18.70(c), Van needed to “only allege ‘some facts about the protected activity,
showing some ‘relatedness’ to the laws and regulations of [SOX].’ This is not a
demanding standard.”47 Contrary to the ALJ’s conclusion, Van’s Restated




43     29 C.F.R. § 1980.109(a); Seguin v. Northrup Grumman Sys. Corp., ARB Nos. 2015-
0038, -0040, ALJ No. 2012-SOX-00037, slip op. at 6 (ARB May 18, 2017) (citing Sylvester,
ARB No. 2007-0123, slip op. at 9).
44      29 C.F.R. § 1980.109(b); Seguin, ARB Nos. 2015-0038, -0040, slip op. at 6 (citing
Menendez v. Halliburton, Inc., ARB Nos. 2009-0002, -0003, ALJ No. 2007-SOX-00005, slip
op. at 11 (ARB Sept. 13, 2011)).
45     18 U.S.C. § 1514A(a)(1).
46     Order at 5.
47    Gallas v. The Med. Ctr. of Aurora, ARB Nos. 2015-0076, 2016-0012, ALJ Nos. 2015-
SOX-00013, 2015-ACA-00005, slip op. at 10 (ARB Apr. 28, 2017) (quoting Klopfenstein v.
PCC Flow Techs. Holdings, Inc., ARB No. 2004-0149, ALJ No. 2004-SOX-00011, slip op. at
17 (ARB May 31, 2006)); see also Evans, ARB No. 2008-0059, slip op. at 9.
                                            8


Complaint satisfies the standard for stating a claim that she engaged in SOX-
protected activity.

     i. Complainant alleged SOX-protected activity related to wire fraud sufficient to
        survive a motion to dismiss.

       Wire fraud is defined as a scheme to defraud, or for obtaining money or
property by means of fraud or fraudulent pretenses, by means of wire, radio, or
television communication.48

       In Van’s Restated Complaint, she asserted that her reports of KYC-CIP
violations constituted disclosures of wire fraud under SOX, as the alleged
misconduct involved the “use of wires.”49 She explained that the purpose of the CIP
procedures was to verify the identity of both U.S. and non-U.S. persons.50 When
verifying the identity of prospective customers through documents without
photographs, the process included: (a) contacting a customer; (b) independently
verifying the customer’s identity by comparing the information provided by the
customer with a public database or other source; and (c) obtaining a financial
statement.51 Van contended that since JP Morgan & Chase’s business was
conducted primarily through electronic applications, including the submission of
identification forms, the majority of her CIP disclosures involved using wires, and
were therefore protected under 18 U.S.C. § 1514A(a).52 She also cited specific
instances of alleged protected activity that she reasonably believed related to wire
fraud under SOX.53 For example, in paragraphs 24 to 26 of the Restated Complaint,
Van noted that she discovered a non-U.S. citizen attempting to open a type of
business account that was not available to non-resident foreign nationals.54 She
followed KYC-CIP procedures for verifying their identity and refused to open the
requested account after determining that the paper copy of an online electricity bill
provided by the customer was altered.55 Van discovered that the customer had
successfully opened a business account at another bank branch using the altered




48    18 U.S.C. § 1343.
49    Restated Complaint at 25.
50    Id. at 19.
51    Id. at 20; 31 C.F.R. § 1020.220(a).
52    Restated Complaint at 25.
53    Id. at 7-14.
54    Id. at 7-8.
55    Id.
                                            9


electricity bill and reported this non-compliant activity to JP Morgan & Chase’s
compliance officials.56

       Van alleged that she believed her reports involved potential wire fraud
because JP Morgan & Chase communicated and processed its representations about
compliance with internal controls and CIP anti-money laundering requirements via
telephone, internet, and facsimile transmissions.57 She also described situations she
believed involved reporting wire fraud based on suspicious funds transfers.58

       The Board has similarly reversed dismissals of claims where complainants
have sufficiently pled facts related to wire fraud under SOX. In Johnson v.
Wellpoint Companies, Inc., the ARB reversed an ALJ’s order granting a motion to
dismiss and motion for summary judgment.59 The ARB noted that in the complaint,
Johnson had alleged that she reasonably believed that Wellpoint’s exclusion of open
inquiries regarding state-sponsored health care plans, which were logged into the
company’s computer tracking system, constituted wire and mail fraud under SOX.60
In reversing the dismissal of Johnson’s claim, the ARB explained that “there was
sufficient information contained in Johnson’s complaint to satisfy the threshold
requirements to survive a motion to dismiss under . . . Evans.”61 Similar to the
Johnson complaint, Van’s Restated Complaint alleged that she reasonably believed
that JP Morgan & Chase’s CIP violations, alleged misrepresentations of the
effectiveness of its internal controls, and customers’ suspicious fund transfers, were
“protected under 18 U.S.C. § 1514A(a) (i.e. wire and mail fraud)” because they
involved the use of wires and other electronic means.62 Construing the evidence in
the light most favorable to Van, we conclude that she has alleged that she engaged
in SOX-protected activity related to wire §1343 fraud, sufficient to survive a motion
to dismiss.

       On appeal, JP Morgan & Chase argues that it was not reasonable for Van to
believe that she was reporting wire fraud when she disclosed various KYC incidents
because five of the six enumerated fraud statutes require a “belief of an intent to
defraud.”63 Unlike the federal circuits in the cases cited by Respondents, however,

56    Id. at 8.
57    Id. at 25.
58    Id. at 7-14, 25.
59      Johnson v. Wellpoint Cos., Inc., ARB No. 2011-0035, ALJ No. 2010-SOX-00038, slip
op. at 2 (ARB Feb. 25, 2013).
60    Id. at 2, 6.
61    Id. at 7.
62    Restated Complaint at 24-25.
63    Resp. Br. at 21.
                                              10


the ARB does not require this “belief of an intent to defraud” when determining
whether a complaint has provided fair notice of a SOX claim. Rather, the ARB
requires a “reasonable belief” of a violation under SOX, which means an employee
has a subjective belief that the complained-of conduct constitutes a violation of
relevant law, and that the belief is objectively reasonable.64 To satisfy the subjective
component, the employee must show that they actually believed that the conduct
constituted a violation of relevant law or was likely to, and to satisfy the objective
component, the employee must show that “a reasonable person of similar
experience, training, and factual knowledge would objectively believe that a
violation has occurred.”65

       We conclude that Van sufficiently pled that she actually believed she
complained of unlawful conduct when she reported various situations of potential
wire fraud. For example, in paragraph 33 of the Restated Complaint, Van indicated
that she filed a SAR about client L.L. because a possible wire transfer “raised her
suspicion of potential money laundering.”66 She also stated that she reported JP
Morgan & Chase’s wire fraud and other unlawful conduct based on her “education
on CIP requirements and FINRA rules and certifications.”67 For these reasons, the
Board concludes that Van’s Restated Complaint sufficiently described several
allegations of protected activity that related to wire fraud under SOX, and these
accusations may be objectively reasonable to employees with similar training and
experience.68

     ii. Complainant alleged SOX-protected activity related to the violation of an
         SEC rule or regulation sufficient to survive a motion to dismiss.

       The whistleblower protection provisions of SOX also prohibit discrimination
against an employee if they provided information or otherwise assisted in an
investigation regarding any conduct which the employee reasonably believed to be a
violation of any rule or regulation of the SEC.69 The ALJ, however, failed to consider
Van’s allegation that she engaged in protected activity because she reasonably

64      Morrell v. DLH Holdings Corp., ARB No. 2023-0030, ALJ No. 2020-SOX-00005, slip
op. at 10-11 (ARB Sept. 23, 2024).
65     Id.
66     Restated Complaint at 10.
67     Id. at 22.
68      See Sharkey v. J.P. Morgan Chase, Co., 660 F. App’x 65, 68 (2d Cir. 2016) (in
concluding that a complainant with similar qualifications and training had a “reasonable
belief” that a client she had reported was involved in possible illegal activity, the Second
Circuit considered the fact that J.P. Morgan Chase’s training materials had identified a
number of the client’s activities as potential money laundering “red flags.”)
69     18 U.S.C. § 1514A(a)(1).
                                            11


believed that JP Morgan & Chase’s actions violated an SEC rule that required
publicly traded companies to have adequate internal controls over their financial
reporting.

       The Board agrees with Van that her Restated Complaint provided “detailed
citations to authority” that “internal control requirements” are set forth in SEC
Rule 13a-15(e), and that “Respondent failed to meet them.”70 In the Restated
Complaint, Van alleged that her disclosures to JP Morgan & Chase officials
“concerned a persistent pattern of violations of the account eligibility and identity
authentication requirements imposed by federal banking and securities laws.”71
Despite these shortcomings, Van contended that JP Morgan & Chase’s SEC filings
indicated it had “disclosed all significant deficiencies in the design or operation of
internal controls” and identified any “material weakness in internal controls”—
which could adversely affect the preparation of its financial data.72 The Restated
Complaint alleged that the continued KYC violations were “evidence of false or
reckless certifications by [JP Morgan & Chase] under Sections 302 and 404 of [SOX]
that it had effective and reliable internal controls in place.”73 Van specifically
pointed out that internal control requirements were set forth in SEC Rule 13a-
15(e).74

      SEC Rule 13a-15 provides that:

             (a)    “Every issuer that has a class of securities registered
             pursuant to section 12 of the Act (15 U.S.C. 781) . . . must
             maintain disclosure controls and procedures (as defined in
             paragraph (e) of this section) and…internal control over
             financial reporting (as defined in paragraph (f) of this
             section).
             (b)    Each such issuer’s management must evaluate . . .
             the effectiveness of the issuer’s disclosure controls and
             procedures, as of the end of each fiscal quarter. . . .
             (c)    The management of each such issuer, that either
             had been required to file an annual report pursuant to
             section 13(a) or 15(d) of the Act. . . for the prior fiscal year
             or previously had filed an annual report with the [SEC] for
             the prior fiscal year . . . must evaluate . . . the effectiveness,


70    See Complainant’s (Comp.) Brief (Br.) at 19.
71    Restated Complaint at 17.
72    Id. at 25.
73    Id. at 26.
74    Id. at 27.
                                             12


              as of the end of each fiscal year, of the issuer’s internal
              control over financial reporting.”[75]

       Disclosure controls and procedures are subsequently defined as “controls and
other procedures of an issuer that are designed to ensure that information required
to be disclosed by the issuer in the reports that it files” are reported within the
required time periods and are “accumulated and communicated to the issuer’s
management.”76

       The Restated Complaint specifically noted that the term “internal control
over financial reporting” is defined as “a process . . . to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting
principles.” 77 Those policies and procedures include those that “provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use
or disposition of the issuer’s assets that could have a material effect on the financial
statements.”78

       In construing the alleged facts in favor of Van, we hold that the Restated
Complaint sufficiently contained facts indicating that Van reported JP Morgan &
Chase’s continued KYC-CIP violations to management because she reasonably
believed these disclosures “related” to a violation of the SEC’s rule requiring
internal controls. For example, Van identified situations when she emailed the
Office of the CEO about the following KYC-CIP violations: (1) client Z.F.’s apparent
false identity as a dual citizen; (2) an employee designating client E.W. a U.S.
citizen when they were a non-U.S. citizen; and (3) the non-closure of an
unauthorized account held by a non-resident.79 We conclude that Van has
sufficiently pled facts sufficient to survive a motion to dismiss, that she engaged in
alleged protected activity because she reasonably believed that JP Morgan & Chase
was violating SEC Rule 13a-15.80

      Contrary to the ALJ’s conclusion and Respondent’s arguments, Van’s July 27,
2022 Restated Complaint satisfies the “low threshold” for stating a claim that Van

75     17 C.F.R. § 240.13a-15(a)-(c).
76     Id. at § 240.13a-15(e).
77     Restated Complaint at 27 (citing 17 C.F.R. § 240.13a-15(f)).
78     Id.
79     Id. at 11-12.
80     See Klopfenstein, ARB No. 2004-0149, slip op. at 17 (in remanding the case for the
ALJ to consider Klopfenstein’s SOX claim, the Board explained that his concerns that PCC
Flow’s conduct violated SEC Rule 13a-15 “related to a general subject that was not clearly
outside the realm covered by the SOX . . . .”).
                                            13


engaged in SOX-protected activity.81 Since Van’s Restated Complaint pled facts
describing SOX-protected activity related to wire fraud and a violation of SEC Rule
13a-15 regarding internal controls, which sufficiently meets the less stringent fair
notice pleading standard, we reverse the ALJ’s dismissal of her SOX claim.82
Additionally, we remand the case to the ALJ to properly consider whether each of
the alleged instances of protected activity in the Restated Complaint provided “fair
notice” of Van’s SOX claim and to proceed with evidentiary proceedings regarding
those specific instances of alleged SOX-protected activity.

3. The July 27, 2022 Restated Complaint Provided Fair Notice of Protected
   Activity Under the CFPA

       A. Burdens of Proof Under the CFPA

       The CFPA whistleblower protection provisions prohibit covered persons or
service providers from terminating or in any other way discriminating against
covered employees if they have engaged in protected activity pertaining to the
offering or provision of consumer financial products or services.83 To establish a
whistleblower claim under the CFPA, an employee must prove by a preponderance
of the evidence that: (1) they engaged in CFPA-protected activity; (2) they were
subjected to an adverse employment action; and (3) the protected activity
contributed to the adverse action.84 If the employee establishes these elements, the
employer may avoid liability if it can prove by clear and convincing evidence that, in
the absence of the protected activity, it would have taken the same adverse action.85

       B. Protected Activity Under the CFPA

       Under the CFPA’s whistleblower protection provisions, an employee engages
in protected activity if they provide or cause to be provided information to the
employer relating to any act or omission that they reasonably believe to be a


81     See Smith v. Franciscan Physician Network, ARB No. 2022-0065, ALJ No. 2020-
ACA-00004, slip op. at 14-15 n.88 (ARB June 29, 2023) (discussing Gallas and describing
the standard for summary judgment, as contrasted with the “low threshold required to
defeat a motion to dismiss.”).
82      See McFadden v. Deutsche Bank, ARB No. 2022-0002, ALJ No. 2021-SOX-00023, slip
op. at 4 (ARB Jan. 26, 2022) (citation omitted) (noting that the “fair notice requirement is
not a demanding standard.”).
83     12 U.S.C. §§ 5481(5), 5567.
84     29 C.F.R. § 1985.109(a); Horn v. Univ. of First Fed. Credit Union, ARB No. 2018-
0033, ALJ No. 2017-CFP-00003, slip op. at 4 (ARB June 18, 2020).
85    29 C.F.R. § 1985.109(b); Childs v. Sente Mortgage, ARB No. 2014-0043, ALJ No.
2013-CFP-00004, slip op. at 3 (ARB Oct. 29, 2015) (citing 12 U.S.C.A. § 5567(c)(3)).
                                             14


violation of the CFPA or any other provision of law that is subject to the jurisdiction
of, or enforceable by, the CFPB, or any rule, order, standard, or prohibition
prescribed by the CFPB.86

       In the January 20, 2023 Order, the ALJ determined that Van failed to allege
that she engaged in protected activity “pursuant to any of the 18 laws within the
Consumer Financial Protection Bureau’s jurisdiction.”87 The ALJ, however, failed to
consider whether Van alleged CFPA-protected activity pursuant to the other
categories of consumer financial laws under 12 U.S.C. §5567(a). The Board agrees
with Van that the “18 laws within the [CFPB]’s jurisdiction” referred to by the ALJ
are only one category of federal consumer financial laws that could form the basis of
protected activity under the CFPA.88 In addition to the 18 enumerated federal
consumer financial laws, the CFPA also protects activity “relating to any provision
of law that is subject to the jurisdiction of the [CFPB].”89

       C. Complainant alleged some facts related to the CFPA’s prohibition against
          unfair, deceptive, and abusive practices sufficient to overcome a motion to
          dismiss

       Section 5536 of the CFPA prohibits covered persons and service providers
from engaging in unfair, deceptive, or abusive acts or practices in connection with
any transaction with a consumer for a consumer financial product or service, or the
offering of a consumer financial product or service.90 Therefore, to meet the fair
notice pleading standard, Van’s Restated Complaint must contain “some facts”
about protected activity that is related to the CFPA’s prohibition against engaging
in unfair, deceptive, or abusive acts or practices in connection with a consumer
financial product or service.91

      Under the CFPA, an act or practice is unfair if it “(1) causes or is likely to
cause substantial injury to consumers which is not reasonably avoidable by
consumers; and (2) such substantial injury is not outweighed by the countervailing


86     12 U.S.C. § 5567(a); see also 29 C.F.R. § 1985.102.
87     Order at 6. The eighteen enumerated consumer financial laws are listed in 12 U.S.C.
§ 5481(12).
88     See Comp. Br. at 42.
89     Childs, ARB No. 2014-0043, slip op. at 3.
90     12 U.S.C. § 5536(a)(1)(B) (“It shall be unlawful for any covered person or service
provider to engage in any unfair, deceptive, or abusive act or practice.”)
91     See Evans, ARB No. 2008-0059, slip op. at 9; see also 29 C.F.R. § 1985.104(e)(2)(i)
(“The complaint . . . must allege the existence of facts and evidence to make a prima facie
showing as follows: (i) the employee engaged in a protected activity.”)
                                              15


benefits to consumers or to competition.”92 In Van’s Restated Complaint, she alleged
that she knew that failure to follow KYC account eligibility requirements could
“injure the interests of customers in uninterrupted access to their money. . . .”93 She
further explained that disregarding CIP requirements could lead to the “unjustified
interruption, freezing, or seizing of their account funds needed to support their
families.”94 We hold that Van provided fair notice of her CFPA claim as she
sufficiently pled disclosure of Respondent’s alleged violation of KYC-CIP procedures
because she believed customers could sustain “substantial injury” of a frozen
account based on improper identity authentication practices.95

       Van also provided “some facts” that related to the CFPA’s prohibition against
deceptive practices. An act or practice is deceptive if it (1) misleads or is likely to
mislead the consumer; (2) if the consumer’s practice, interpretation of the
representation, omission, act, or practice is reasonable under the circumstances;
and (3) if the representation, omission, act, or practice is material.96 In Van’s
Restated Complaint, she alleged that she disclosed that JP Morgan & Chase was
engaged in “consumer financial fraud . . . by intentionally perpetrating and
acquiescing to customers and clients being misled as to their eligibility to open,
maintain, and use their accounts.”97 Van further argued that Respondent was
“actively misrepresenting client status and verification as U.S. persons and non-U.S.
persons in order to induce them to deposit their funds with JP Morgan & Chase,
and to pay for banking services” marketed by JP Morgan & Chase.98 We conclude,
therefore, that Van sufficiently pled that she disclosed Respondent’s violations of
CIP identity authentication procedures because she reasonably believed that JP




92     12 U.S.C. § 5531(c)(1).
93     Restated Complaint at 6 (emphasis added).
94     Id. at 22.
95     See CFPB v. Think Finance, LLC, 2018 WL 3707911, at *1, 8 (D. Mont. Aug. 3, 2018)
(in denying the defendant’s motion to dismiss, the district court determined that defendant
had engaged in “unfair and abusive practices” when it collected loan payments that
customers did not owe).
96     See Investigator’s Desk Aid to the Consumer Financial Protection Act of 2010
(CFPA) Whistleblower Protection Provision, at pp. 6-7; see also CFPB v. Gordon, 819 F.3d
1179, 1192 (9th Cir. 2016) (explaining that “an act or practice is deceptive if (1) there is a
representation, omission, or practice that, (2) is likely to mislead consumers acting
reasonably under the circumstances, and (3) the representation, omission, or practice is
material.”).
97     Restated Complaint at 22 (emphasis added).
98     Id. (emphasis added).
                                             16


Morgan & Chase’s conduct was misleading potential customers about their
eligibility to open and maintain bank accounts.99

       Lastly, Van’s Restated Complaint also described activity that could be
considered abusive under the CFPA. A practice is abusive if it “takes unreasonable
advantage of (a) lack of understanding on the part of the consumer of the material
risks, costs, or conditions of the products or service; (b) the inability of the consumer
to protect the interests of the consumer in selecting or using a consumer financial
product or service; or (c) the reasonable reliance of the consumer on a covered
person to act in the interests of the consumer.”100 Van explained in her Restated
Complaint that federal regulations required that the CIP include risk-based
procedures for verifying a customer’s identity, which included an assessment of the
“bank’s size, location, and customer base.”101 Van indicated that JP Morgan &
Chase had a large client base of “foreign born customers, many of whom had
significant language and cultural barriers to understanding account eligibility
standards.”102 She argued that instead of complying with federal regulations to
consider its customer base, JP Morgan & Chase had its “employees and managers
aggressively attempt to gain them as customers, despite CIP.”103 Since Van’s
Restated Complaint alleged facts that JP Morgan & Chase was taking unreasonable
advantage of the lack of understanding on the part of its concentration of foreign
born customers regarding the CIP identity eligibility requirements needed to open
and maintain accounts, we conclude that Van has sufficiently pled that she engaged
in CFPA-protected activity.104

        JP Morgan & Chase contends that Van did not allege a claim under the
CFPA because the “alleged KYC incidents in no way rise to the level of what OSHA
itself considers to encompass ‘unfair, deceptive, or abusive’ acts or practices against
consumers with regard to CFPA whistleblowers.”105 We reject this argument for two

99     See CFPB v. Certified Forensic Loan Auditors, LLC, 2020 WL 2556417 at *2, 4 (C.D.
Cal. May 20, 2020) (in denying the defendant’s motion to dismiss, the district court found
that the CFPB had sufficiently pled that defendants engaged in deceptive practices when
they “misrepresented” the likely effectiveness of their services and qualifications of those
that performed them in order to convince consumers to purchase their services).
100    12 U.S.C. § 5531(d).
101    Restated Complaint at 19 (citing 31 C.F.R. § 1020.220(a)).
102    Id. at 22 (emphasis added).
103    Id. at 19.
104    See Think Finance, LLC, 2018 WL 3707911, at * 8 (the district court noted that the
amended complaint sufficiently pled a claim for abusive conduct under the CFPA when the
complaint asserted “that borrowers lacked an understanding” of the law applicable to
[d]efendants’ loans” . . . .).
105    Resp. Br. at 36-37.
                                           17


reasons. First, Respondent’s argument would essentially require Van to
demonstrate an actual violation of the CFPA to plead that she engaged in protected
activity. The law, however, does not require such a showing to survive a motion to
dismiss. Instead, a motion to dismiss is based “solely on the allegations in the
complaint . . . not whether evidence exists to support such allegations.”106 Second, a
covered employee need only allege they “reasonably believe” that the reported
conduct is a violation of the CFPA or any other provision of law that is subject to the
jurisdiction of the CFPB, or any rule, order, standard, or prohibition prescribed by
the CFPB.107

       When construing the evidence in the light most favorable to Van, we conclude
that Van has adequately provided “some facts” about alleged protected activity that
she reasonably believed were related to CFPA’s prohibition about engaging in
unfair, deceptive, or abusive acts or practices against consumers related to a
consumer financial product or service. As Van provided fair notice of her CFPA
claim, we reverse the ALJ’s finding to dismiss her CFPA claim and remand the case
to the ALJ to proceed with evidentiary proceedings.

                                     CONCLUSION

       For the above reasons, we REVERSE the ALJ’s Order Granting
Respondent’s Motion to Dismiss and REMAND this matter for further proceedings
consistent with this decision and order.

      SO ORDERED.




                                        ____________________________________
                                        IVEY S. WARREN
                                        Administrative Appeals Judge



                                        ____________________________________
                                        SUSAN HARTHILL
                                        Chief Administrative Appeals Judge




106   Evans, ARB No. 2008-0059, slip op. at 10.
107   12 U.S.C. § 5567(a)(1).
                                      CERTIFICATE OF SERVICE



ARB-2023-0018 Amy Van v. JP Morgan (Case No: 2022-SOX-00028)


I certify that the parties below were served this day.




         11/05/2024
     (DATE)                                                        Thomas O. Shepherd, Jr., Esq.
                                                                  Clerk of the Appellate Boards


Amy Van                                                  Assistant Secretary, Occupational Safety and Health
PO Box 1228                                              Administration (OSHA)
Chino Hills, CA 91709                                    U.S. Department of Labor
       --Certified                                       200 Constitution Ave, NW
                                                         Room: S-2315
                                                         Washington, DC 20210
Michael Schissel , Esq.                                          --Electronic
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New York, NY 10019
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                                                         Standards
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Pamela Safirstein, Esq.
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                                                         U.S. Department of Labor, Office of Administrative
Stephani Lynne Ayers, Esq.                               Law Judges
P. O. Box 1061                                           200 Constitution Avenue, N.W.
Medford, OR 97501                                        Room S-4325
        --Electronic
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Thad Guyer, Esq.
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