Q: What’s a whistleblower? A: Depends on who you ask.
Case in point: a recent federal court decision in which the employer’s claims for a narrow definition of “whistleblower” were rejected. Joseph Adams from law firm Snell & Wilmer explains:
“[T]he plaintiff was a former vice president of human resources who asserted that the company was not following its pension plan. He initially reported his concerns to management, then to the audit committee of the board of directors and finally to the SEC. Following these events, the company allegedly stripped him of his responsibilities and eventually terminated his employment. He later sued and asserted, among other things, a violation of the anti-retaliation provisions of Section 922 of Dodd-Frank.
The employer sought to dismiss the Dodd-Frank claim on the grounds that the plaintiff did not report his concern to the SEC in the required manner (he sent a letter but did not use the required form), and that the conduct at issue did not actually constitute a violation of SEC rules or regulations.”
The court disagreed. From law firm Orrick:
“In rejecting [the employer’s] argument, the court noted that the company’s ‘interpretation would dramatically narrow the … protections available to potential whistleblowers,’ which was inconsistent with Dodd-Frank’s goal of improving accountability and transparency in the financial system and creating new incentives and protections for whistleblowers. Instead, the court held, the better reading comes from the SEC’s final rule, which protects from retaliation an individual who possesses ‘a reasonable belief’ that the information provided relates to a possible securities violation and who then provides the information in a manner prescribed within the anti-retaliation section.”
What does the ruling mean going forward? Foley & Lardner:
First, the court held that a whistleblower may pursue claims under both Dodd-Frank and Sarbanes-Oxley; in fact, disclosures that are protected under Sarbanes-Oxley also are protected under Dodd-Frank. Second, it ruled that plaintiffs do not have to report a tip to the SEC in the manner prescribed by the SEC in the Dodd-Frank Act… Third, the court found that the plaintiff’s complaint about the mismanagement of the defendant’s pension plan, including potential conflicts of interest and failure to submit plan amendments to the board or the SEC, satisfied Sarbanes-Oxley’s requirement that a plaintiff ‘reasonably’ believes there had been a violation of SEC rules or regulations.”
Read the updates:
- Federal Courts Endorse an Expanded Definition of a “Whistleblower” – Companies Should Carefully Consider the Who and How When Claims Are Made - Snell & Wilmer L.L.P.
- Federal District Court Expands Whistleblower Protections Under Dodd-Frank - Foley & Lardner LLP
- The Tip Is In the Mail: Court Tries to Make Sense of Dodd-Frank’s Whistleblower and Retaliation Provisions and Asks Whether It’s Enough Just to Send a Letter – Orrick