Second Circuit Extends Dodd-Frank Whistleblower Protections to Employees Who Only Report Wrongdoing Internally
On September 10, 2015, the Second Circuit held that an employee who reports wrongdoing internally -- but not to the SEC -- is protected under the whistleblower provisions of the Dodd-Frank Act. In Berman v. Neo@Ogilvie LLC, the plaintiff, a finance director of the defendant, alleged that he was fired after internally reporting that some of the defendant’s practices amounted to accounting fraud. He did not timely report any allegedly unlawful activities to the SEC. Although the Dodd-Frank Act defines “whistleblower” as a person who reports violations to the SEC, a divided Second Circuit panel determined that the Act was sufficiently ambiguous to warrant deference to the SEC’s interpretive rule, which extends the whistleblower protections against retaliation to employees who report only internally (and not to the SEC). The dissent argued that the Dodd-Frank Act was unambiguous and that it does not extend whistleblower protections to individuals who do not timely report wrongdoing to the SEC.