Michael Rhinehimer v. U.S. Bancorp Investments, Inc.
LEG 500- Law, Ethics, and Corporate Governance
24 January 2016

Numerous companies have been exposed by their employees for many instances such as wrong-doing within an organization, misconduct in the workplace, dangers, corruption, etc. These employees are known as whistleblowers, people who reveals a company internally or externally about their unethical practices. In the case of Rhinehimer vs U.S. Bank, there are allegations that the bank let an employee practice unsuitable investments upon an elderly client. Witnessing an act that is morally wrong and deciding to confront it is how whistleblowers are formed. We will examine key characteristics of whistleblowers, the case of Rhinehimer, the actions of the whistleblower, and a whistleblower’s protection under the Sarbanes-Oxley Act. Michael Rhinehimer was an advisor and certified financial planner at the U.S. Bank in Newport, Kentucky. He had to take medical leave in August 2010 and left Patrick Harrigan, another CFP, in charge of his accounts. Rhinehimer warned Harrigan not to take advantage of the elderly clients because some had declining mental capabilities. Rhinehimer’s caution was dismissed. Correia (2015) explains what happened: Harrigan had persuaded a 94-year old elderly client to invest a total of $900,000 in two mutual funds that soon lost money and resulted in substantial penalties for the client. The two transactions, however, generated significant commissions for the advisor (Correia, 2015 p. 5). Harrigan took advantage of the client and when Rhinehimer returned to work he reported the incident to the supervisor. The supervisor dismissed his claims stating that he was on medical and left Harrigan his accounts. Rhinehimer furthered the matter eventually triggering the Financial Industry Regulatory Authority (FINRA) investigation. After FINRA’s dismissal of the investigation with no consequences for Harrigan, Rhinehimer received a write up for triggering a FINRA investigation from his supervisor. “Shortly after Rhinehimer was placed on a performance improvement plan that required him to increase his revenue to $40,000 a month from $29,215” (Correia, 2015, p. 6). When he was unable to perform the nearly impossible numbers he was terminated January 2011. He filed a lawsuit in July 2011. Rhinehimer’s trial was in 2013 and on May 28, 2015 he won $250,000 for economic loss and emotional damages. “U.S. Bank tried to appeal the decision to the U.S. Court of Appeals for the Sixth Circuit, but was unsuccessful. The Sixth Circuit Court upheld the jury’s decision earlier this year” (Correia, 2015, p. 6). Examining this case, there was no significant effect on the U.S. Bank’s business or its existing clients. Rhinehimer’s actions caused other CFPs to be cautious with the handling of the 94-year old man account. Whistleblowers are specialized individuals working in a professional environment. They are compassionate about their expertise and people. They seek people’s best interest and are pragmatic. Whistleblowers are uninterested in corrupt behavior and are guided by their own morals. Michael Rhinehimer was an honest man and his actions are justified. Rhinehimer explained to the courts that when he met the client he was in his early 80s. He claim the client was very engaged then. Rhinehimer states,” As time went by, I would notice that he would ask me the same things at multiple meetings or what we discussed at the last meeting” (U.S. Courts, 2015, p. 3). By this time he was in his 90s and clearly deteriorating. My guidelines of morality align with Rhinehimer. The elderly is constantly taken advantage of by criminals in society. Harrigan, although still employed with U.S. Bank, should not have took the client’s investments from a trust to a brokerage account that destroyed his estate and inheritance for his family. Rhinehimer was protected by the Sarbanes-Oxley Act because he was retaliated against by the supervisors of the U.S. Bank. When he arrived back at work and made the complaint against Patrick Harrigan, it was followed by a written warning. Later the written warning was followed up with a performance improvement plan that was made with the intention for him to fail by nearly doubling his goal monthly. “Sarbanes-Oxley prohibits any public company, or “any officer, employee, contractor, subcontractor, or agent of such company,” from retaliating against “an employee.” 18 U.S.C. § 1514A(a)” (Knott, 2015). What is epic about this case is the courts’ ruling because a whistleblower only needs proof that the laws of Sarbanes-Oxley Act were violated in order to be protected. This case only affected an individual based on the wrong-doing of one account when usually there are multiple errors in a case that effects shareholders. This applied the whistleblower protection in an untraditional manner. This case is significant because this huge arena of legislation protect employees who invest in these massive corporations and Rhinehimer made a case where all the company’s financial advisors have to be accountable for one client.

References
Correia, M. (2015). Bank Advisor Wins Whistleblower Case. Bank Investment Consultant, 23(8), 5-6.
Knott, J. M. (2015, June 8). Sixth Circuit upholds financial planner. Retrieved January 22, 2016, from http://www.lexology.com/library/detail.aspx?g=838457a5-2e3b-4e9e-9055-05c64d8929a0
Michael Rhinehimer v. U.S. Bancorp Investments, Inc. (United States Court of Appeals May 28, 2015), 2015 United States U.S. Courts 13-6641, at *3.