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Second Circuit: No Dodd-Frank Protections for Whistleblowers Overseas

The U.S. Second Circuit Court of Appeals made an important ruling in August, deciding that the whistleblower protections in the 2010 Dodd-Frank Act do not cover individuals who work for companies located outside the United States.

In the ruling, the court sided with Siemens AG, a well-known German engineering and technology firm, in a case involving a former company attorney based in Taiwan who claimed he was terminated after he reported a potential issue of fraud. The attorney’s complaint states that he discovered Siemens AG employees making unethical payments to North Korean and Chinese officials to secure the sale of health care equipment. After reporting the matter to his superiors, the lawyer said his authority within the organization became restricted and he was eventually fired.

In his claim, the attorney argued that he should have been protected through the whistleblower provisions of the Dodd-Frank Act, which provides awards and protections to eligible whistleblowers who provide valuable information on illegal or unethical activities to the U.S. Securities and Exchange Commission (SEC). However, the Second Circuit ruled that these protections did not apply because the alleged wrongdoing occurred outside the country. Although Siemens AG does list a class of stock on an American stock exchange, the court deemed this insufficient toward establishing jurisdiction in the U.S.

This was an important court decision related to how far the Dodd-Frank Act may go in protecting whistleblowers abroad. On the other hand, it could prompt Congress to expand the law to better protect these individuals in the future.

If you discover potentially improper or unethical activities within your organization, you have certain protections available under Dodd-Frank and other federal and state laws. Consult a knowledgeable Dallas attorney with Whistleblower Law for Managers to learn more.

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