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Volume XIII, Number 35

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SEC (Securities and Exchange Commission) Argues for Broad Construction of Dodd-Frank Act Whistleblower Anti-Retaliation Provision

In the wake of recent SEC pronouncements about huge numbers of whistleblower complaints in the pipeline, one of the most hotly contested issues under the Dodd-Frank Wall Street Reform and Consumer Protection Act “Dodd Frank Act”) has been the question of whether the Dodd Frank Act’s whistleblower anti-retaliation provision protects only those individuals who report wrongdoing directly to the U.S. Securities and Exchange Commission (“SEC”) or whether it also protects individuals who report their concerns only internally. In response to an outcry from business leaders that the Dodd Frank Act would eviscerate the internal reporting mechanisms they put into place in the wake of the Sarbanes-Oxley Act (SOX), the SEC has taken the position in its final rules implementing the Dodd Frank Act that the statute also protects individuals who report their concerns only internally. Three recent cases from the Northern District of California, the District of Colorado and the Fifth Circuit Court of Appeals (the only Circuit Court of Appeals to address the issue), however, have held otherwise.

On February 20, 2014, the SEC weighed in on this issue in an amicus brief it filed in the U.S. Court of Appeals for the Second Circuit. In Liu v. Siemens A.G., 13-4385, Men-Lin Liu alleges that his former employer, Siemens A.G., terminated his employment in retaliation for making internal disclosures regarding a corruption and kickback scheme he allegedly uncovered at the company. On appeal, Liu raised an issue that lured the SEC into filing its Amicus Brief, namely, whether the Dodd Frank Act’s anti-retaliation provision protects employees, regardless of whether they report information directly to the SEC or opt instead to report it internally.

In its Amicus Brief, the SEC argued that anyone who engages in the whistleblowing activities described in the Dodd Frank Act is protected by the Act, irrespective of whether the individual makes a separate report to the SEC. While the SEC’s position is good for public companies, because it encourages employees to report their concerns internally—thereby giving companies an opportunity to investigate their allegations and, if necessary, correct the problem without litigation—it is bad for companies once they are embroiled in litigation.  Unlike SOX, the Dodd Frank Act entitles whistleblowers to automatic double damages, an expansive six- to ten-year statute of limitations, and a direct right of action in federal district court.

Jackson Lewis P.C. © 2023National Law Review, Volume IV, Number 113
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About this Author

Nick Beerman, Employment and Labor Law, Shareholder Jackson Lewis
Shareholder

Nick M. Beermann is a Shareholder in the Seattle, Washington office of Jackson Lewis P.C.  Mr. Beermann practices in all areas of employment and labor law with emphasis in employment contracting and dispute resolution, corporate governance and internal investigations, Sarbanes-Oxley compliance and litigation, trade secret and non-competition advice and litigation, discrimination and harassment advice and litigation, ERISA litigation, OSHA investigations and charge resolution, business entity disputes, WARN advice, wage and hour compliance and...

206-405-0404
James M. Lord, Jackson Lewis Law Firm, White Collar Attorney
Shareholder

James M. Lord is a Shareholder in the Denver office of Jackson Lewis P.C. and is a member of the firm’s White Collar & Government Enforcement and Corporate Governance & Internal Investigations practice groups. Mr. Lord's practice at Jackson Lewis concentrates on white collar criminal defense, False Claims Act and Qui Tam/Whistleblower defense, internal investigations, corporate governance and compliance issues, regulatory training, and asset recovery and repatriation.

303-892-0404
Sarah C. Baskin, Jackson Lewis, employee benefit plans lawyer, lost wages attorney
Of Counsel

Sarah Baskin is Of Counsel in the Hartford, Connecticut, office of Jackson Lewis P.C. She litigates claims alleging discrimination, harassment, retaliation, breach of contract, whistleblower violations, Sarbanes Oxley, False Claims Act, and Dodd-Frank Act claims, denial of benefits and breach of fiduciary duty claims under ERISA, and a variety of other statutory and common law claims.

Ms. Baskin also has experience handling class actions involving pension claims and Microsoft-type misclassification claims seeking...

(860) 522-0404
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