SEC Victory in Protection of Whistleblowers
A federal court of appeals ruled in early September that the 2010 Dodd-Frank financial reform law protected corporate whistleblowers who voice concerns to their company about possible wrongdoing prior to alerting securities regulators. The decision comes as a defeat for those who argue protection should not be granted if the individual does not first approach the government with their concerns.[i]
The Dodd-Frank Wall Street Reform and Consumer Protection Act, better known as Dodd-Frank, is an outgrowth of the 2008 Great Recession. It is a law intended to protect consumers and prevent a reoccurrence of abusive lending practices that brought about the collapse of major financial institutions.[ii]
Recognizing the feasibility of retaliation faced by those who bring attention to possible wrong-doing, Dodd-Frank created, “significant new whistleblower incentives and protections, including the creation of SEC and CFTF (Commodities Futures Trading Commission) whistleblower programs, expansion of current whistleblower protections under the Sarbanes-Oxley Act of 2002, and a new whistleblower cause of action for employees performing tasks related to consumer financial products or services.”[iii]
Judge Jon Newman, author of the federal appeals court opinion, suggested that, “expanding the protections would chiefly benefit auditors and attorneys who are barred from reporting alleged wrongdoing to the SEC until they have brought it to their employer’s attention.”[iv] Food for thought.
[i] Whistleblowers, SEC Are Winning in Ruling (2015, September 11) The Wall Street Journal, p. B4.
[ii] Dodd-Frank Act: CNBC Explains (2012, May 11) [electronic format] Retrieved from http://www.cnbc.com/id/47075854
[iii] Whistleblower Claims Under the Dodd-Frank Wall Street Reform and Consumer Protection Act: The New Landscape (n.d) New York State Bar Association [electronic format] Retrieved from https://www.nysba.org/Sections/Labor_and_Employment/Labor_PDFs/LaborMeetingsAssets/Whistleblower_Claims_Under_Dodd_Frank.html
[iv] Whistleblowers, SEC Are Winning in Ruling (2015, September 11) The Wall Street Journal, p. B4.