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Exactly What Part Of “To The Commission” Is Ambiguous?

The Dodd-Frank Act gave us many things, including Section 21F of the Securities Exchange Act of 1934.  Section 21F, prohibits employers from retaliating against a “whistleblower”.  15 U.S.C. § 78u-6(h)(1)(A).  We need not guess about the definition of “whistleblower” because Congress conveniently provided the following definition:

. . . any individual who provides, or 2 or more individuals acting jointly who provide, information relating to a violation of the securities laws to the [Securities and Exchange] Commission, in a manner established, by rule or regulation, by the Commission.

15 U.S.C. §78u-6(a)(6) (emphasis added).  Remarkably, the SEC ignored Congress’ definition and adopted a rule that extends whistleblower protection to persons who do not provide information to the SEC.  17 C.F.R. § 240.21F-2.  The Fifth Circuit Court of Appeals rejected the SEC’s “expansive interpretation of the term ‘whistleblower’ for purposes of the whistleblower-protection provision”. Asadi v. G.E. Energy United States, L.L.C., 720 F.3d 620, 630 (5th Cir. 2013).  A split in the Courts of Appeal later arose when the Second Circuit deferred to the SEC’s interpretation in Berman v. Neo@Ogilvy LLC, 2015 U.S. App. LEXIS 16071 (2d Cir. Sept. 10, 2015).

As I discussed in this post from September 2017, an intra-circuit split developed here in the Ninth Circuit.  Yesterday, that split was resolved when the Ninth Circuit followed the Second Circuit’s approach.  Somers v. Digital Realty Trust, 2017 U.S. App. LEXIS 4079 (9th Cir. 2017).  Judge John B. Owens‘ dissent is succinct and to the point:

I agree with the Fifth Circuit in Asadi v. G.E. Energy (USA), L.L.C., 720 F.3d 620, 621 (5th Cir. 2013), and Judge Jacobs’ dissent in Berman v. Neo@Ogilvy LLC, 801 F.3d 145, 155-60 (2d Cir. 2015), and therefore respectfully dissent. Both the majority here and the Second Circuit in Berman rely in part on King v. Burwell, 135 S. Ct. 2480 (2015), to read the relevant statutes in favor of the government’s position. In my view, we should quarantine King and its potentially dangerous shapeshifting nature to the specific facts of that case to avoid jurisprudential disruption on a cellular level. Cf. John Carpenter’s The Thing (Universal Pictures 1982).

© 2010-2020 Allen Matkins Leck Gamble Mallory & Natsis LLP National Law Review, Volume VII, Number 68

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About this Author

Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm
Partner

Keith Paul Bishop is a partner in Allen Matkins' Corporate and Securities practice group, and works out of the Orange County office. He represents clients in a wide range of corporate transactions, including public and private securities offerings of debt and equity, mergers and acquisitions, proxy contests and tender offers, corporate governance matters and federal and state securities laws (including the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Act), investment adviser, financial services regulation, and California administrative law. He regularly advises clients...

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