larry golston1 U.S. Supreme Court case shines light on fight against corporate compliance programsWhistleblowers are vital to exposing bad behavior within the walls of corporate America. Yet, regulations that offer whistleblower protections may be significantly limited during the U.S. Supreme Court’s (SCOTUS) current term.

An example of this is the case Digital Realty v. Somers, which seeks to sidestep anti-retaliation measures enacted by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank).

Digital Realty, a global provider of data centers, has asked the Court to overturn a lower court decision that found in favor of the company’s former Vice President Paul Somers, according to Bloomberg Technology. Somers was fired after reporting alleged violations of securities law to senior management. Digital Realty argues that Somers should not have been afforded Dodd-Frank protections because he reported the potential wrongdoing internally and not directly to the U.S. Securities and Exchange Commission (SEC).

Dodd-Frank was enacted in response to the Great Recession “to provide many new and stricter regulations of the financial industry,” the American Bar Association explains. It also included a set of anti-retaliation provisions to better protect whistleblowers in the areas of consumer protection and commodities. The protections were added as an extension of Section 21F of the Securities Exchange Act of 1934.

Prior to the publication of the final Dodd-Frank Act, Law360 explains, the U.S. Chamber of Commerce (Chamber) argued that the proposed protections encouraged employees to sidestep a company’s internal compliance program and report directly to the SEC. In an effort to appease the Chamber, federal regulators included provisions addressing this concern. The provisions, including financial incentives, encouraged or required employees to report misbehavior through established internal compliance programs before reporting the conduct to the SEC.

However, after Dodd-Frank was enacted, the Chamber and some of the country’s largest corporations made an about-face regarding the policy and began “waging war against their own compliance programs,” according to Law360. Courts often ruled in favor of companies that retaliated against employees who reported wrongdoing internally. Yet, the lower court and the Ninth Circuit agreed with Somers that employees who report misconduct through internal corporate channels should benefit from Dodd-Frank anti-retaliatory protections.

Should SCOTUS agree with Digital Realty, the consequences could reach beyond whistleblowers. If employees no longer feel they can safely report misconduct internally, “corporate compliance programs will be dead,” Law360 reports. Some legal analysts believe the damage has already occurred and battle lines have been drawn – companies vs. their own corporate compliance programs.

* * *

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:
Bloomberg Technology
American Bar Association
Law360



We're here to help!

We live by our creed of "helping those who need it most" and have helped thousands of clients get the justice they desperately needed and deserved. If you feel you have a case or just have questions please contact us for a free consultation. There is no risk and no fees unless we win for you.

Fields marked    may be required for submission.
  1. I'm an attorney

Most of $3.7 billion in taxpayer recoveries in 2017...

Whistleblowers were responsible for nearly 92 percent of the $3.7 billion the United States government...

Whistleblowers expose illegal drug recycling in Penn...

The whistleblower complaints alleged that Med-Fast violated the False Claims Act by distributing and...
Whistleblower

CFTC whistleblower program finally gaining steam

Payouts of $45.5 million would be a record for the CFTC since its whistleblower program was created...

Is SCOTUS poised to limit SEC whistleblowers?

The Dodd-Frank Act defines a whistleblower as someone who tips off the SEC, and that is the narrow...

Failure to promptly disclose FCA lawsuit triggers...

The SEC filed the lawsuit against RPM International after the company violated antifraud regulations...

Fifth Circuit rules in favor of Trinity for Lack of...

Josh Harman, a former customer and competitor of Trinity Industries, filed a sealed False Claims Act...

The extra mile

I can't thank Beasley Allen enough for their excellent and hard work. At every point, they went the extra mile.

—Kay