In an important decision that all potential SEC whistleblowers should heed, a unanimous Supreme Court has made it clear that employees who seek to obtain the anti-retaliation protections of the Dodd-Frank Act (which provides for the SEC whistleblower program) must actually report their whistleblower-related information to the SEC. If a person brings their concerns only to company insiders – and not to the SEC through a whistleblower action – then the courts will not consider that person a whistleblower and thus that person may not be able to bring a legal action against their employer pursuant to the Dodd-Frank act if they are fired.
A Whistleblower Is One Who Reports to the SEC, Not Internally
The case – Digital Realty Trust, Inc. v. Somers – involved an individual named Paul Somers who brought information relating to securities laws violations to his employer, Digital Realty Trust, a real estate investment trust. Somers was then terminated shortly thereafter, and he brought an employment law action against Digital Realty Trust for violating the Dodd-Frank Act anti-retaliation provisions.
But, in writing for the court, Justice Ruth Bader Ginsburg said Somers could not claim protection as a whistleblower because the law makes clear that, “A ‘whistleblower’ is ‘any individual who provides…information relating to a violation of the securities laws to the Commission.” Because Somers only reported internally, he was not considered a whistleblower and thus not entitled to protection.
Why Working With a Whistleblower Attorney to Bring an SEC Action Makes Sense
No doubt, Somers likely thought he was doing the right thing by raising questions about illegality internally before taking that information to government authorities. Corporate insiders often try to persuade employees that reporting internally is the right and proper thing to do, but this case shows that placing your trust in the company’s internal watchdog mechanisms can be a recipe for disaster.
Instead, employees who have information about securities violations or other illegal behavior are encouraged to work with their own private whistleblower attorneys in a confidential manner. A whistleblower attorney will advise the employee on the proper method for bringing a whistleblower action to increase the chances of a whistleblower reward and avoid retaliation.
Recovering Your Own SEC Whistleblower Award
If you are aware of misconduct in your organization that violates SEC regulations, you too may be able to recover a significant financial reward by presenting information related to the misconduct to the SEC Whistleblower Office. By working with an experienced whistleblower attorney, you can not only improve your chances of recovering an award (typically 10% to 30% of the total recovery made by the SEC as result of the information provided), but also take steps to protect yourself from retaliation in the process.
At Kreindler & Associates, we are committed to helping whistleblowers win maximum compensation by bringing wrongdoing to light, while taking all necessary precautions to protect their interests. To learn more about how Kreindler & Associates can help in your SEC whistleblower matter, see here.
