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.
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