Dodd-Frank Whistle-Blower Protections Need Strengthening


Most everyone knows that a whistle-blower is someone who reports wrongdoing at their workplace to the authorities. But just exactly who qualifies as a whistle-blower and what you have to do to qualify for the legal anti-retaliation protections outlined in the Dodd-Frank Act remains a bit murky.

No one is questioning that the anti-retaliation provision in the Dodd-Frank Act provides a strong and important protection for whistle-blowers. But there are a number of legal precedents and cases winding through the courts that — barring further federal legislation — are likely to more closely define what it is that a whistle-blower must do to qualify for the full legal protections of the current federal law.

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SEC taking “expansive view” on whistle-blower definition

According to a January 5th article in the New York Times, to date the SEC has taken an expansive view that would offer full whistle-blower protection from retaliation to any employee who reports information either internally or to a government agency. This expansive interpretation obviously encourages whistle-blowers to step forward, which has big business advocates up in arms and arguing that only whistle-blowers who bring information directly to the government should qualify for the reward and anti-retaliation protection.

The SEC claims its expansive interpretation of the whistle-blower clause in Dodd-Frank is reasonable given the vagueness of the law.

Recent court cases

The U.S. Court of Appeals for the Fifth Circuit recently ruled in Asadi v. G.E. Energy that the law “clearly expresses Congress’s intention to require individuals to report information to the S.E.C. to qualify as a whistle-blower under Dodd-Frank.”

However, the S.E.C. recently filed a “friend of the court” brief in the federal appeals court in Philadelphia arguing that the reference to the Sarbanes-Oxley Act provides an “implied exception” to the whistle-blower definition and validates the agency’s broader interpretation of a whistle-blower.

Of note, some federal district courts have accepted the argument that reporting misconduct to the S.E.C. is not an absolute requirement for receiving anti-retaliation protection, rejecting the Asadi v. G.E. Energy argument saying a report to the S.E.C. is required.

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