In early August, the Securities and Exchange Commission (SEC) issued some clarification on rules regarding internal whistleblower reporting. According to the agency, whistleblowers are to be protected under the Dodd-Frank Act when they report misconduct both internally and directly to the SEC. This is the first formal clarification the SEC has issued, and it clears up the incorrect belief many people held that whistleblowers were only to benefit from Dodd-Frank protections if they made their reports directly to the federal agency.
Although the law does require whistleblowers to report directly to the SEC if they hope to be eligible for greater confidentiality protections and possible bounty compensation, they are still protected from employer retaliation under federal law if they make their report internally. This directly contradicts a decision recently made by the Fifth Circuit Court of Appeals.
The SEC gave three reasons why it interprets the rules in this way:
This new clarification from the SEC is extremely important for the world of whistleblower law. Now there can be more consistency in court rulings about how various protections apply. To learn more about this issue, speak with a skilled Dallas lawyer at Whistleblower Law for Managers.