The Dodd-Frank Act of 2010 contains a number of important rules regarding the protection of employees who blow the whistle on corporate wrongdoing.
Numerous corporations have tried to strike down these rules by lobbying the Securities and Exchange Commission (SEC), but the federal agency realizes just how important it is to have comprehensive whistleblower protections in place. In fact, anyone who helps the SEC uncover a case of corporate wrongdoing that results in sanctions of more than $1 million can receive an award of 10 to 30 percent of the total sanction amount.
Despite the way the law is worded, however, courts throughout the United States are still divided over what the word “whistleblower” means. Legislation is not extremely clear as to whether an employee who only goes through internal reporting processes and does not go to the SEC actually qualifies for the anti-retaliation protections provided through the Dodd-Frank Act.
SEC provides guidance, but confusion remains
To help clarify this matter, the SEC issued an interpretive rule late last summer to provide more detailed definitions of what it means to be a whistleblower.
According to the agency, whistleblowers do have to report directly to the SEC if they wish to qualify for a reward. Simply reporting the wrongdoing internally is not enough. However, employees who only report internally do still qualify for the anti-retaliation provisions of the Dodd-Frank Act.
For some jurisdictions, this seems to be a mixed message. In July 2013, the Fifth Circuit Court of Appeals ruled Dodd-Frank only protects employees who made their reports directly to the SEC. Until the SEC issued its interpretive rule, many courts were still going by that precedent. Even after the interpretive rule was released, there has still been some confusion in the courts.
If you would like to explore the possibility of filing a whistleblower report, speak with a skilled Dallas attorney at Whistleblower Law for Managers today.
