The U.S. Supreme Court announced it will take up a case that could determine if corporate whistleblowers have the same protections against retaliation when they report their concerns about misconduct internally as they do when they report them to the Securities and Exchange Commission (SEC).
The case in question is Digital Realty Trust v. Somers. The real estate investment trust has issued challenges to rulings in lower courts in a case that Mr. Somers, a former vice president of the firm, originally brought.
Somers says he was fired after submitting complaints to senior management about actions by his supervisor that were allegedly in violation of Sarbanes-Oxley Act securities regulations. Somers filed his lawsuit under a whistleblower anti-retaliation provision of the Dodd-Frank Act.
Digital Realty Trust argued that Somers’ claim should not proceed because he did not complain to the SEC. The company claims the definition of “whistleblower” under the Dodd-Frank Act requires reporting of wrongdoing to the agency. Because Somers did not do so, Digital Realty Trust claims he is not entitled to whistleblower protections.
There is an SEC regulation that states whistleblowers are entitled to Dodd-Frank protections regardless of whether wrongdoing is reported to the SEC or the employer. The SEC also offers rewards to whistleblowers who report their concerns internally before taking them to the federal government.
Some legal experts believe that if Somers loses the case, future whistleblowers will start taking their complaints directly to the SEC rather than bothering to report them internally, an outcome that would not be particularly beneficial for businesses. They would not have the opportunity to resolve potential violations of securities laws before they are subjected to SEC enforcement actions.
To learn more about the protections available to you if you choose to serve as a whistleblower, meet with an experienced Dallas attorney at Whistleblower Law for Managers.