Working for Justice

The Supreme Court Clarifies the Definition of Whistleblower Under Dodd Frank: What You Need to Know

Posted March 2nd, 2018 by in Whistleblower Law.

Last week, the Supreme Court, by a 9-0 vote, issued an important ruling on the protections that the Dodd Frank Wall Street Reform Act offers to whistleblowers. The case, Digital Realty Trust Inc. v. Somers, determined that Dodd Frank protects from retaliation only those whistleblowers who complain about corporate fraud to the Securities Exchange Commission. By contrast, the Court explained, the Sarbanes Oxley Act protects not only whistleblowers who complain to the Securities Exchange Commission, but also whistleblowers who complain internally within their company, such as to a supervisor. There’s a catch, though: An employee filing a retaliation complaint under Sarbanes Oxley has to file a charge with another government agency, the Occupational Safety and Health Administration, within 180 days of suffering retaliation.

As Justice Ginsburg, writing for the Court, put it:

Endeavoring to root out corporate fraud, Congress passed the Sarbanes-Oxley Act of 2002, 116 Stat. 745 (Sarbanes-Oxley), and the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, 124 Stat. 1376 (Dodd-Frank). Both Acts shield whistleblowers from retaliation, but they differ in important respects. Most notably, Sarbanes-Oxley applies to all “employees” who report misconduct to the Securities and Exchange Commission (SEC or Commission), any other federal agency, Congress, or an internal supervisor. 18 U. S. C. §1514A(a)(1). Dodd-Frank delineates a more circumscribed class; it defines “whistleblower” to mean a person who provides “information relating to a violation of the securities laws to the Commission.” 15 U. S. C. §78u– 6(a)(6). A whistleblower so defined is eligible for an award if original information he or she provides to the SEC leads to a successful enforcement action. §78u–6(b)–(g). And, most relevant here, a whistleblower is protected from retaliation for, inter alia, “making disclosures that are required or protected under” Sarbanes-Oxley, the Securities Exchange Act of 1934, the criminal anti-retaliation proscription at 18 U. S. C. §1513(e), or any other law subject to the SEC’s jurisdiction. 15 U. S. C. §78u–6(h)(1)(A)(iii).

This is a little complicated, so let’s break it down: An employee who knows about violations of securities laws and complains about them is entitled to be free from retaliation is be entitled to a reward for reporting the violations to the SEC. Under Dodd Frank, an employee who reports securities law violations to the SEC is entitled to an award from the SEC if the SEC brings a successful enforcement action. Dodd Frank also protects the employee from retaliation for reporting to the SEC. Sarbanes-Oxley also protects from retaliation employees who provide information to the SEC, and, further protects such employees from retaliation for complaining internally or to other federal agencies. But in order to invoke Sarbanes Oxley’s protections, the whistleblower must file a charge of retaliation before OSHA within 180 days of suffering the retaliation (for example, the employee’s termination or demotion).

Here’s the upshot: If you have knowledge of securities law violations, you should contact a whistleblower attorney as soon as possible. With proper counsel, employees can navigate the complicated and, at times, byzantine landscape of retaliation and whistleblower lawsuits. Sanford Heisler Sharp’s New York, Washington, San Francisco, San Diego, and Tennessee whistleblower attorneys have helped many clients do so.

Russell Kornblith

Russell Kornblith

Russell Kornblith is the New York Managing Partner who works on both qui tam / whistleblower cases and on discrimination cases. Learn More

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