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The U.S. Supreme Court’s Digital Realty decision presents good and bad news to public companies and other entities regulated by the U.S. Securities and Exchange Commission (SEC). The so-called “good” news is that the decision limits their liability for alleged retaliatory acts by ruling that Dodd-Frank does not provide a private right of action to employees who only report potential misconduct internally to the company. Yet, by taking away this protection, the court effectively directs employees to bypass their company’s compliance programs and instead report the alleged misconduct directly to the SEC (or at the very least, simultaneously report the potential misconduct to the SEC and the company). Therein lies the apparent “bad” news.

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