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Division among courts deepens over whistleblower protection for internal complaints under Dodd-Frank

We’ve been looking in recent posts at the topic of whistleblower protections, and the issue of protected activity. As we’ve noted, exactly what activity is protected depends on the specific law under which the violations are reported, and the jurisdiction in which whistleblower protection is sought.

A good example of this is the current split between the courts on the issue of whether internal whistle-blowing is protected under the Dodd-Frank Act. As some readers may know, the Dodd-Frank Act was passed in the wake of the 2008 financial crisis with the aims of protecting consumers from abusive lending practices and ensuring increased transparency and accountability of lending institutions. 

Dodd-Frank compliance is an important concern for businesses in the financial industry. In order to help ensure compliance, whistleblowers are protected from reporting violations of the law. One of the unresolved issues at present, however, is whether those who report suspected violations of law through a company’s internal complaint process are entitled to protection under the law.

Earlier this month, the 9th Circuit Court of Appeals ruled that whistleblower protections under the Dodd-Frank Act do apply to workers who report suspected violations of securities laws internally rather than to federal regulators. The whistleblower in the case had reported violations of the law to management and was later fired. When he tried to assert whistleblower protections in court, he met with opposition on the grounds that the law only protects those who report suspected violations to the Securities and Exchange Commission.

In our next post, we’ll continue looking at this issue as it has been dealt with by other courts.

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