Media Coverage
Source: Compliance Week
Media Coverage
Press Contacts: Erik Cummins, Matt Hyams, Olivia Thomas
04.04.17
Last month, a 9th Circuit Court of Appeals panel split 2-1 in a ruling that the Dodd-Frank Act’s anti-retaliation protections cover whistleblowers even if they don’t report their claims externally to the Securities and Exchange Commission (SEC). In the case, Somers v. Digital Realty Trust, Paul Somers sued his former employer for wrongful termination when he was fired after his internal report of possible securities law violations to management.
The ruling contrasts with a 2013 5th Circuit Court of Appeals decision in Asadi v. GE Energy, which strictly interpreted Dodd-Frank to find that only whistleblowers who report directly to the SEC are entitled to protections.
Securities Litigation & Enforcement partner Bruce Ericson tells Compliance Week that the 5th Circuit ruling sends a “terrible message” to companies that have prioritized developing a successful internal compliance program where employees are encouraged to report concerns to management.
But despite the Somers decision deepening an existing division among lower courts by broadening the definition of a whistleblower, Ericson says little has changed for companies from an ethical, compliance and legal perspective and they should assume a whistleblower is protected regardless of whether they report internally or to the SEC first.
“That’s the prudent approach,” he said. “To act otherwise is kind of reckless.”