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SEC Argues in Second Circuit Amicus Brief That Dodd-Frank Protects Inside Whistleblowers

On February 6, the Securities Exchange Commission filed an amicus brief advising the United States Court of Appeals for the Second Circuit that the whistleblower protections of the Dodd-Frank Wall Street Reform and Consumer Protection Act cover individuals who report wrongdoing internally before reporting to the SEC. The amicus brief was filed in support of appellant Daniel Berman, a former employee at marketing firm Neo@Oglivy LLC, who was fired after reporting accounting violations to his supervisors. Because Berman did not notify the SEC of wrongdoing until six months after his termination, the lower court found that he was not protected by the Dodd-Frank Act’s anti-retaliation provisions. The Dodd-Frank Act added Section 21F to the Securities Exchange Act of 1934, which directs the SEC to pay monetary awards to whistleblowers whose reports result in successful enforcement actions and prohibits employers from retaliating against whistleblowers. In its brief, the SEC asserted that in issuing the final rules implementing Section 21F, it sought to ensure that the whistleblower program did not undermine individuals who report violations internally before contacting the SEC. The SEC argued that the rules provide additional economic incentives to those who report wrongdoing internally. Specifically, it noted that Rule 21F-2(b)(1), which designates categories of persons who are considered “whistleblowers” for the purposes of the anti-retaliation provisions, includes individuals who report violations to persons or governmental authorities other than the SEC. The SEC asserted that a contrary interpretation would weaken its authority to pursue enforcement actions against retaliatory employers. The SEC urged the court to grant deference to its interpretation as the agency charged with administration of the Dodd-Frank Act.

Brief of the Securities and Exchange Commission, Amicus Curiae in Support of the Appellant, Berman v. Neo@ogilvy LLC et al., Second Cir. No. 14-4626 (Feb. 2015).

©2020 Katten Muchin Rosenman LLPNational Law Review, Volume V, Number 51

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About this Author

Associate

Margaret McQuade concentrates her practice on matters of employment law and executive compensation, with an emphasis on negotiating and drafting a wide range of agreements, and mediating and arbitrating claims on behalf of both employees and employers.

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