Last month the Securities and Exchange Commission’s (SEC) Office of the Whistleblower (OWB) released its annual report for fiscal year 2015, announcing that the commission received 3,923 whistleblower tips this fiscal year, more than any other year the program has been in operation and up more than 30 percent from fiscal year 2012.1 The OWB further noted that protecting whistleblowers from retaliation was a focus in 2015, and will continue to be a focus in 2016.2 Given this focus, the OWB was undoubtedly in good spirits when, in September of this year, a panel of the U.S. Court of Appeals for the Second Circuit became the first federal appellate court to hold that employees need not report alleged violations of federal securities law to the SEC to be protected against retaliation under the Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, 124 Stat. 1376 (2010), (Dodd-Frank). Under Berman v. Neo@Ogilvy, 801 F.3d 145, 155 (2d Cir. 2015), employees also may be protected when they report to someone within their organization.
The Berman decision directly conflicts with the only other federal appellate opinion on the issue from the U.S. Court of Appeals for the Fifth Circuit in Asadi v. G.E. Energy, 720 F.3d 620, 630 (5th Cir. 2013). In this month’s column, we analyze both decisions on the scope of coverage under Dodd-Frank’s anti-retaliation provision. The Fifth Circuit found that the plain language of the statute unambiguously requires reporting to the SEC. By contrast, the Second Circuit concluded that the statute is sufficiently ambiguous as to require deference to the SEC’s contrary interpretation of the statute. After analyzing these opinions, we propose several steps companies can take to avoid litigation in this area.
