UPDATE: In Digital Realty Trust, Inc. v. Somers, the Supreme Court clarified the scope of the whistleblower protection provision of the Dodd-Frank Act. Click here to learn more about anti-retaliation protections for SEC whistleblowers under the Dodd-Frank Act and Sarbanes-Oxley Act.
An article in Law360 entitled “Employers May Regret Forcing Dodd-Frank Whistleblower Test” quotes SEC whistleblower lawyer Jason Zuckerman about the Supreme Court’s decision to review the Ninth Circuit’s opinion in Somers v. Digital Realty Trust holding that the anti-retaliation provision in the Dodd-Frank Act protects internal whistleblowing. The article analyzes the potential impact of limiting the Dodd-Frank Act’s anti-retaliation provision to cover only whistleblowing to the SEC, and quotes Zuckerman’s predictions about a decision reversing the Ninth Circuit:
“This might ultimately be a Pyrrhic victory for employers,” said whistleblower attorney Jason Zuckerman of Zuckerman Law. “Narrowing protection for internal whistleblowing will likely result in more whistleblowers disclosing securities law violations directly to the SEC.”
Zuckerman said the anti-retaliation provisions of Sarbanes-Oxley [Act] remain a strong remedy to combat whistleblower retaliation, pointing to a recent federal jury verdict that awarded former Bio-Rad general counsel Sanford Wadler $8 million in back wages and punitive damages for retaliation. . . . Zuckerman said employees are already fearful that reporting securities law violations will result in reprisal and could ultimately be “career suicide.”
“I think this will only heighten the concern that corporate employees have about blowing the whistle,” Zuckerman said. If that happens, Zuckerman said, employers would “win the battle but lose the war” by reducing their ability to detect fraud internally.
Dodd-Frank Whistleblower Retaliation
SEC Whistleblower Attorneys