A whistleblower suit filed on April 2, 2015 in U. S. District Court of Northern California by a former presidential press secretary may shed light on some uglier aspects of the private equity world.
Adam Levine, press secretary for President George W. Bush for 2002 – 2003 and an employee of TPG Capital from 2008 through 2014, sued the private equity firm based on state and federal whistleblower laws, including Dodd-Frank. These whistleblower laws established a private cause of action for a whistleblower whose employer retaliates against him/her for lawfully providing information to the Security Exchange Commission (SEC).
A “whistleblower” generically is one who reveals acts/omissions that break laws and/or pose a threat to the public. Within the United States, “whistleblower” can refer to a federal, state or private employee who:
– reasonably believes his/her employer has broken a law, rule or regulation;
– brings or at least testifies at a related proceeding; or
– refuses to act or fail to act in violation of the subject law, rule or regulation.
Levine’s suit alleges that while working as TPG Capital’s head of public affairs, he attended a speech by Andrew Bowden, an SEC director, who stated that private equity funds habitually violate SEC regulations by hiding fees and overcharging investors. The private equity funds supposedly sneakily overcharge by, for example, shifting their own costs onto portfolio companies and therefore onto the investors without proper disclosure. Levine allegedly realized that TPG was violating SEC regulations in precisely that fashion; consequently, he notified some members of upper management via e-mail.
Management was reportedly displeased with Levine’s e-mail. “Displeased” may be an understatement, as TPG partner Clive Bode allegedly remarked that if Levine had sent the e-mail directly to him, Bode would have “hunted” down Levine and “gutted him like a carp.”
When Levine’s warnings were allegedly ignored, Levine e-mailed TPG co-founders Jim Coulter and David Bonderman, threatening to notify the SEC. Levine was allegedly fired 15 minutes later.
After Levine’s termination on December 31, 2014, TPG sued Levine for allegedly misappropriating confidential documents and electronic devices, and then leaking confidential material about TPG to the media. Levine denies the allegations, though he also claims to have contacted the SEC regarding TPG’s alleged SEC violations.
Levine’s suit alleges that TPG’s suit is merely an aspect of its retaliation against him for whistleblowing. His suit seeks up to $738,761 in non-cash compensation owed to him, general damages for emotional distress, and punitive damages.
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