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The federal government administers whistleblower protections under two statutes: the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Act of 2010. Both statutes contain provisions protecting whistleblowers from retaliation. Whereas Sarbanes-Oxley bars retaliation against internal whistleblowers (that is, employees who report misconduct to superiors within the company), Dodd-Frank protects whistleblowers who provide information to the SEC. The U.S. Supreme Court formally recognized the SEC reporting requirement in Digital Realty Trust Inc. v. Somers, a unanimous 2018 opinion finding that Dodd-Frank whistleblower provisions extend only to employees who provide information to the SEC. The decision invalidated an SEC rule encompassing internal whistleblowers within the statute’s anti-retaliation protections and resolved a circuit split on the issue.
Under Dodd-Frank, the SEC offered financial incentives to whistleblowers who provide information about possible violations of federal securities laws. Eligible whistleblowers can qualify for an award of between 10% and 30% of the monetary sanctions collected by the SEC if their original information leads to a successful enforcement action and penalties are more than $1 million. Additionally, the SEC implemented Regulation 21F to enhance protections against retaliation for whistleblowers who report new information about possible securities violations to the SEC. The law bolstered enforcement of these provisions by creating a private cause of action, allowing whistleblowers to litigate retaliation claims in federal court. As of June, the SEC has awarded $384 million to 64 individuals since the start of the program, including $168 million in fiscal year 2018. Such unprecedented financial incentives encourage whistleblowers to provide the SEC with information, often bypassing internal reporting mechanisms. Moreover, courts continue to protect whistleblowers against retaliation, including in a case in February 2019 where the Ninth Circuit upheld a jury verdict awarding $8 million in compensatory and punitive damages to a company’s former general counsel who claimed he was fired for reporting compliance violations.
You may bring an action in federal court within a certain time period if your employer violates the anti-retaliation provisions of Dodd-Frank. If you are successful in court, you may be entitled to reinstatement, double back pay, litigation costs, expert witness fees, and attorneys’ fees.The anti-retaliation protections generally apply to employees who report information regarding possible violations of the federal securities laws. Among other things, these protections provide that an employer may not discharge, demote, suspend, threaten, harass, or in any way discriminate against a whistleblower in the terms or conditions of employment for: Providing information to the SEC under the whistleblower program, or initiating, testifying in, or assisting the SEC in any investigation or proceeding. In addition, the SEC may also bring an enforcement action against a company that violates the anti-retaliation provisions of Dodd-Frank. You may also be able to file a retaliation complaint in federal court under Section 806 of the Sarbanes-Oxley Act of 2002 (“SOX”). You can find information about your rights and protections under SOX on the Department of Labor’s whistleblower website.
With the passage of Dodd-Frank, Congress amended the Exchange Act to add Section 21F, which established a series of new incentives and protections for individuals to report possible violations of the federal securities laws, including enhanced employment retaliation protections. On February 21, 2018, the United States Supreme Court issued an opinion in Digital Realty Trust, Inc. v. Somers stating that the Dodd-Frank anti-retaliation provisions only extend to those persons who provide information relating to a violation of the securities laws to the SEC. To understand how this may affect you, we encourage you to consult with an attorney.If you choose to report a possible securities law violation internally to your company, you also can report that information directly to the SEC either before or at the same time as reporting internally. If you have already reported to the company, you can still report to the Commission now. Regardless of whether the anti-retaliation protections extend to you, you may remain eligible for an award under our whistleblower award program. We encourage you to provide information about potential securities law violations to the SEC by submitting a tip.
Such an agreement may violate the federal securities laws. Rule 21F-17(a) provides that “[n]o person may take any action to impede an individual from communicating directly with the Commission staff about a possible securities law violation, including enforcing or threatening to enforce a confidentiality agreement…with respect to such communications.”If you have been asked to sign such an agreement, or have already signed such an agreement, and want to understand how the rules may apply to you, we encourage you to consult with an attorney. You may also send us a copy of your agreement, if you so choose, by submitting it as a tip either through our online portal or by mail or fax.
Dodd-Frank does not specifically state whether, or to what extent, the anti-retaliation protections apply to individuals or conduct outside of the United States. To understand if the anti-retaliation protections may apply to you, we encourage you to consult with an attorney. We encourage you to submit a tip to the SEC if you believe you have been retaliated against for reporting potential securities law violations even if the retaliation occurred outside of the United States. Regardless of whether the Dodd-Frank anti-retaliation protections extend to you, you may remain eligible for an award under our whistleblower award program. You do not need to reside or work in the United States to be eligible for an award under our whistleblower award program.
