Wall Street Whistleblowers no longer protected from being fired

picUnited States Supreme Court narrows Obama Era protections for Whistleblowers


In a unanimous decision, the US Supreme Court decided that the protections for Whistleblowers granted by the Dodd-Frank Act should only apply to people who report legal violations to the SEC.  The Dodd-Frank Act was passed into law by Congress in 2010 after the financial crisis.  It protected Wall Street whistleblowers from being fired, demoted or harassed for reporting securities law violations.  The Sarbanes-Oxley Act of 2002 preceded the Dodd-Frank act.


The case in question, Digital Realty Trust v. Somers involves Paul Somers, vice president of Digital Realty Trust, was fired after he reported potential SEC violations to his bosses.  He sued Digital Realty under the Dodd-Frank act for whistleblower retaliation.  Digital Realty argued that since Somers did not report the suspected violations to the SEC, he was not protected under Dodd-Frank.  The trial court and Ninth Circuit found in favor of Somers and refused to dismiss the case based on the narrow interpretation of the Act.


SCOTUS reverses lower court ruling

SCOTUS reversed the ruling of the lower courts stating that the plain language of Dodd-Frank limits protections to employees who report violations to the SEC, not those who merely report suspected violations internally.  Justice Ruth Bader Ginsburg wrote for the court, stating that Dodd-Frank defines “whistleblower” as a person who provides “information relating to a violation of the securities laws to the Commission.”  She explains that “Sarbanes-Oxley applies to all “employees” who report misconduct to the Securities and Exchange Commission, any other federal agency, Congress, or an internal supervisor.” [1]


The Supreme Court’s decision to narrowly interpret Dodd-Frank could have far-reaching implications.  It helps to clarify what penalties companies would face for “internal-only” whistleblowers.  It may also force the hand of whistleblowers to report suspected violations directly to the SEC.  Companies would be forced to undergo significant costs and the scrutiny of public reporting.


The Future of Dodd-Frank

The current administration hopes that to ultimately change the overall scope of the Dodd-Frank Act.  Trump has called the Act a “disaster” and believes that the Act put into effect after the financial crisis of 2008 hurts economic growth.[2]  Changing Dodd-Frank would require legislation by Congress.


To learn more about the legislation currently affecting our country, contact Amicus Capital Group.  We have been a trusted source of litigation financing for going on 20 years.  We are a private banking company dedicated to providing resources for attorneys to finance litigation and obtain legal loans.  Contact us today for more information.


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[1] https://www.supremecourt.gov/opinions/17pdf/16-1276_b0nd.pdf

[2] http://money.cnn.com/2017/06/12/news/economy/treasury-dodd-frank-trump/index.html