On 10 September 2010, the federal appellate court based in New York held, contrary to the view of another federal appellate court, that an employee who reports suspected securities law violations to the employer is entitled to the protection of the whistleblower anti-retaliation provision in the Dodd-Frank Act even if the employee did not report those allegations to the SEC. This decision is contrary to a prior decision of the federal appellate court based in Louisiana, and thus creates a disagreement between the two federal appellate courts to have ruled on this issue.

In Berman, the former finance director of Neo@Ogilvy, a media agency, claimed under the Dodd-Frank Act's whistleblower anti-retaliation provision that he was fired in retaliation for his reporting suspected accounting fraud internally. The Dodd-Frank Act, which was enacted following the recent financial crisis, defines a "whistleblower" as someone who reports a possible federal securities law violation to the SEC. But the statute's anti-retaliation provision includes a prohibition on retaliation against whistleblowers who make reports in accordance with the Sarbanes-Oxley Act of 2002, which, in turn, covers those who report only internally and not to the SEC. The court concluded that because the anti-retaliation provision covering those who report internally would have an "extremely limited scope ... if it were restricted by the [SEC] reporting requirement in the 'whistleblower' definition," and the legislative history did not clarify at all whether Congress intended for that provision to be so limited, it is at least ambiguous whether the Dodd-Frank Act's anti-retaliation provision requires a whistleblower to report to the SEC in order to qualify for its protection. Applying the principle of deferring to a federal agency in its reasonable interpretation of certain statutes, as described in the discussion of the Montford case above, the court here deferred to the SEC's interpretation that the anti-retaliation provision applies even to someone who reports suspected securities violations only to his or her employer and not to the SEC.

The court here was split internally, with a vociferous dissent arguing that the statute is not at all ambiguous in its definition of "whistleblower" and that "[t]he majority ignores the distinction Congress drew" between the anti-retaliation provision of the Dodd-Frank Act―which provides a broader set of remedies to a narrower category of whistleblowers―and the Sarbanes-Oxley Act, which provides narrower remedies to a wider group of complainants. On the other hand, the majority opinion explained that while it was deviating from the only other federal appellate court decision on this question, "a far larger number of district courts have deemed the statute ambiguous and deferred to the SEC's Rule." Unless this split in authority is resolved by the Supreme Court, whether an employee that reports suspected securities violations only internally is covered by the Dodd-Frank Act's whistleblower anti-retaliation provision will depend on the jurisdiction in which that claim is brought.

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