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Federal Court Rules That Providing Testimony to FINRA Is Not Protected Activity Under Dodd-Frank

On April 19, 2018, the United States District Court for the District of New Jersey held that providing testimony to FINRA (which is overseen by the SEC) does not constitute protected activity for purposes of establishing a Dodd-Frank whistleblower claim.  Price v. UBS Financial Services, Inc., No. 2:17-01882.

Background.  Plaintiff, a former UBS Private Wealth Advisor, testified before FINRA regarding allegedly unlawful activities by company management.  After Plaintiff was terminated, Plaintiff brought anti-retaliation claims under Dodd-Frank and the Florida Whistleblower Act.  The Court denied the dismissal of the Florida Whistleblower Act claim, but stayed the Dodd-Frank pending the Supreme Court’s decision in Digital Realty Trust, Inc. v. Somers.  On February 21, 2018, the Supreme Court issued their decision, holding that the anti-retaliation provision in Dodd-Frank does not extend to individuals who failed to report the potential violation to the SEC.  Digital Realty Trust, Inc. v. Somers, 138 S. Ct. 767, 772 (2018).

Ruling.  Following the decision in Digital Realty Trust, Inc. v. Somers, UBS moved to lift the stay and dismiss Plaintiff’s Dodd-Frank claim with prejudice arguing that testifying before FINRA did not equate to providing information to the SEC.  Plaintiff opposed the dismissal, arguing that his disclosures were sufficient since the SEC oversees FINRA and its rulemaking process and disciplinary proceedings.  The court dismissed Plaintiff’s Dodd-Frank claim, holding that the Digital Realty decision makes clear that the “core objective of Dodd-Frank’s robust whistleblower program… is to motivate people who know of securities law violations to tell the SEC.”  Digital Realty, 138 S. Ct. at 777.  (internal quotations and citations omitted).  Accordingly, the Court determined that Plaintiff’s testimony to FINRA did not meet the statutory requirement to report information to the SEC.

Implications.  This decision demonstrates that federal courts may take narrow view as to the definition of “whistleblower” under Dodd-Frank’s anti-retaliation provisions and that plaintiffs must report misconduct to the SEC in order to be protected by Dodd-Frank.

© 2019 Proskauer Rose LLP.


About this Author

Harris M Mufson, Class/Collective Action Attorney, Proskauer
Senior Counsel

Harris Mufson is a senior associate in the Labor & Employment Law Department and a member of the Employment Litigation & Arbitration and Whistleblowing & Retaliation Groups.

Adept at counseling clients at every turn of the litigation process, Harris represents employers in a variety of industries, including financial services, health care, entertainment, sports and legal, with respect to a wide range of labor and employment law matters. These include compensation disputes, employment discrimination and retaliation, whistleblowing,...

Brett Schwab, Proskauer Law Firm, Labor and Employment Attorney

Brett Schwab is an associate n the Labor & Employment Law Department.

While attending the University of Pennsylvania Law School, Brett served as the Co-President of the Entertainment & Sports Law Society. Brett was also a Senior Editor for the Journal of Business Law and a Senior Advocate for the Employment Advocacy Project.

Brett’s professional experience includes placements with the Philadelphia 76ers, Wells Fargo Bank, and Comcast-Spectacor. His ideas on NBA Draft Lottery reform have been published on the popular analytics website FiveThirtyEight.