If You See Something, Say Something, But Maybe Only To The SEC

June 18, 2014  |  The Insider: White Collar Defense and Securities Enforcement

A debate has been raging in the courts over whether an employee who reports suspected misconduct only to his employer but not to the U.S. Securities and Exchange Commission (“SEC”) is a “whistleblower” entitled to the protection of the Anti-Retaliation Provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank”). Last summer, in Asadi v. G.E. Energy (USA), L.L.C., the Fifth Circuit Court of Appeals – the only federal appellate court to address this issue –ruled that an employee who reported a potential Foreign Corrupt Practices Act (“FCPA”) violation to his employer was not a “whistleblower” because he did not “provide information relating to a violation of the securities laws to the SEC,” contradicting five federal district courts which had found internal reporting to be adequate. (I analyzed the Asadi opinion and its likely effect on internal reporting in “When Is A ‘Whistleblower’ Not Really A ’Whistleblower’?”). A few district courts have since adopted the Fifth Circuit’s interpretation, but most have concluded that, consistent with the SEC’s own rules, internal reporting is sufficient to implicate Dodd-Frank’s protections. [...]

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