Is SCOTUS poised to limit SEC whistleblowers?

posted on:
December 1, 2017

author:
Andrew Brashier

category:
Fraud

andew brashier1 Is SCOTUS poised to limit SEC whistleblowers?In oral arguments Tuesday, the U.S. Supreme Court seemed poised to bar whistleblowers from suing companies for illegal retaliation under the Dodd-Frank Act if they’ve only voiced their complaints about the alleged wrongdoing internally, and not to the Securities and Exchange Commission (SEC).

The arguments sought to clarify the definition of a whistleblower under the law as argued in the case of Paul Somers, a vice president and portfolio manager of Digital Realty in Singapore. He claims he was fired in 2014 after telling senior executives in San Francisco about potential financial misconduct in a company project in Hong Kong.

Mr. Somers sued Digital Realty, claiming the company violated whistleblower protections provided under the Dodd-Frank Act of 2010 when it fired him. The Act was introduced in the wake of the 2008 Wall Street collapse and prohibited employers from lashing out at anyone who “made disclosures” of potential violations and other wrongdoing.

The Dodd-Frank Act also defines a whistleblower as someone who tips off the SEC, and that is the narrow interpretation that the high court sounds willing to support.

A final ruling in the case is expected early next year. If the Supreme Court does bar internal whistleblowers from the law’s protections, it would reverse the decision of two circuit courts that had decided the case in Mr. Somers’ favor.

Digital Realty has maintained in its appeals of the case that the federal whistleblower law protects only those who report potential securities violations to the SEC.

Supreme Court Justice Neil Gorsuch believes that U.S. courts should interpret the laws strictly according to their text instead of on their broader intent, and he expressed his frustration at the lower courts’ verdicts for Mr. Somers in Thursday’s hearing.

“I’m just stuck on the plain language here. How much clearer could Congress have been?” Gorsuch asked a lawyer for the whistleblower.

Supreme Court Justice Elena Kagan acknowledged the loophole afforded by the law’s language and structure, calling it “odd.”

“It’s peculiar. It’s probably not what Congress meant. But what makes it the kind of thing where we can just ignore it?” she said. She also agreed that a literal interpretation of the law could produce misguided, conflicting results for whistleblowers.

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Are you aware of fraud being committed against the federal government, or a state government? If so, you may be protected and rewarded for doing the right thing by reporting the fraud. If you have any questions about whether you qualify as a whistleblower, please contact an attorney at Beasley Allen for a free and confidential evaluation of your claim. There is a contact form on this website, or you may email one of the lawyers on our whistleblower litigation team: Archie Grubb, Larry Golston, Lance Gould or Andrew Brashier.

Sources:
Los Angeles Times
New York Times
RightingInjustice

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