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In an article discussing cases in the U.S. Supreme Court’s (SCOTUS) docket, it mentions the Digital Realty litigation has drawn interest in part because of its subject—the reach of the 2010 Dodd-Frank Act’s whistleblower protections.
SCOTUS agreed to review a Ninth Circuit opinion that revived former Digital Realty executive Paul Somers’ claims he was terminated based on false allegations of misconduct after complaining to senior management that a senior VP president eliminated some internal corporate controls in violation of the Sarbanes-Oxley Act. A split panel ruled that Dodd-Frank’s whistleblower anti-retaliation provision “unambiguously and expressly protects” both those who report to the U.S. Securities and Exchange Commission and internal whistleblowers. The question of whether the SEC went too far in expanding Dodd-Frank’s whistleblower protections is a key one for companies. While some pro-business groups have supported the case, a SCOTUS victory may lead to more whistleblower headaches.
If potential whistleblowers feel they will only get the expansive protections that Dodd-Frank and the SEC provided by going to the commission rather than reporting internally and getting Sarbanes-Oxley’s less stringent anti-retaliation protections, they’re going to go to the SEC, said partner and Chair of the Firm’s Whistleblower Representation Practice, Jordan Thomas.
And that would mean more probing by the SEC, more costs for outside counsel and potentially more enforcement actions, said Thomas, who helped set up the SEC’s Whistleblower Program.