SEC Clarifies Discrepancy in Whistleblower Definitions
- posted: Mar. 03, 2016
- Whistleblower Litigation
An important milestone in U.S. whistleblower protections came last August when the Securities and Exchange Commission (SEC) clarified some existing discrepancies in what constitutes “whistleblowers” and the protections afforded to them.
There had previously been some questions as to whether whistleblowers were entitled to protection under the Dodd-Frank Wall Street Reform and Consumer Protection Act if they only reported corporate wrongdoing internally and not directly to the SEC. Additionally, members of Congress were considering extending the time period in which the SEC is able to enforce violations of securities laws beginning at the occurrence of the violation.
In a news release, the SEC stated a whistleblower does not need to report securities law violations to the federal agency to be subject to the protections afforded to whistleblowers under the Dodd-Frank Act. Reporting the violation alone is enough to be protected from retaliation. However, whistleblowers must report the violation directly to the SEC if they hope to be compensated with whistleblower awards based on the total amount of sanctions issued in the case, as well as confidentiality as outlined in the Dodd-Frank Act.
Soon after the SEC released this clarification, Sen. Jack Reed (D-Rhode Island) introduced a bill that would extend the SEC’s time period for securities violation enforcements. Currently the SEC has five years after the occurrence of the violation — but under the new rule, that time period would be 10 years. This bill is most likely meant to counter the effect of the U.S. Supreme Court’s decision in Gabelli v. SEC, which ruled the five-year statute of limitations for such enforcements should begin at the occurrence of the violation, not at the discovery of it.
If you have any questions about whistleblower protections available under the Dodd-Frank Act, contact an experienced Dallas attorney at Whistleblower Law for Managers.