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15 March 2017

Ninth Circuit whistleblower ruling affirms protections for internal reporters

A divided bench of the US Court of Appeals for the Ninth Circuit has narrowly ruled that whistleblower provisions under Dodd-Frank apply to employees raising concerns about illegal activity internally, not just those who approach regulators.

By Kathryn Higgins

The court’s 2-1 ruling on the case of Somers vs Digital Reality Trust follows in the footsteps of an earlier decision in the Second Circuit, which found that Congress did not intend to limit whistleblower protection to only those individuals who report wrongdoing directly to the US Securities and Exchange Commission. The original lawsuit, first filed in 2014, accused data centre operator and owner Digital Reality of firing former executive Paul Somers after he raised concerns internally about potential securities law violations.

Congressional intent

Delivering the court’s decision, Judge Mary Schroeder wrote that adopting such a ‘narrow’ interpretation of the whistleblower definition would ‘make little practical sense and undercut congressional intent’, which the court found was to ‘protect those who report violations internally as well as those who report to the government.’ Lawyers for the SEC have also consistently taken the position that whistleblowers are able to invoke protection under Dodd-Frank even if the Commission is the first point of contact for their report. 

Source: Corporate Counsel

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