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Supreme Court tightens whistleblower protections under Dodd-Frank

The Supreme Court ruled Feb. 21 that in order to gain protection from anti-retaliation, whistleblowers must report a violation of securities laws to the Securities and Exchange Commission first.

The decision concerns a court case from Paul Somers, who alleges that his former employer Digital Realty Trust Inc. wrongfully terminated his employment for reporting suspected securities law violations to senior management. Somers attempted to claim whistleblower retaliation protections under Dodd-Frank postcrisis laws, which include anti-retaliation provisions covering individuals providing "information relating to a violation of the securities laws to the Commission, in a manner established, by rule or regulation, by the Commission."

Somers claimed that interpreting the law as written would allow companies to continue violating securities laws based on whether or not a report is filed with the SEC.

In a unanimous decision, the court ruled that a whistleblower must report to the SEC in order to obtain the Dodd-Frank protections. The opinion notes that the tighter interpretation of whistleblower protections is supported by Dodd-Frank's "purpose and design," which incorporated monetary awards for actionable information to incentivize whistleblowers to report misconduct to the government.