The distinct split between the Second and Fifth Circuit Courts’ interpretation as to when whistleblower protections are allowed has now summoned the attention of the U.S. Supreme Court. Despite clarifications issued in 2015 by the SEC to shed more clarity on Dodd Frank’s anti-retaliation protection to whistleblowers who reported alleged misconduct either internally to company officials or externally to government regulatory bodies, the U.S. Supreme Court will take the case of Digital Realty Trust v. Somer in the Fall of 2017, and finally render a final verdict for when whistleblower protection becomes enforceable. During the interim, it becomes vital for Compliance Officers to have appropriate policies and procedures in place to guide employees in reporting potential misconduct and/or fraud, and to establish a tone of non-retaliation for such reporting, in order to safeguard the best interests of the public and shareholders of the company.
As a result of the financial crisis during 2007-2010, the Dodd- Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) was signed into federal law in July 2010 by President Obama to prevent the economic “meltdown” from happening again.
Ostensibly, the legislation was primarily designed to increase overall regulation of the financial industry. However, and perhaps more importantly for compliance professionals, Dodd-Frank also contained a number of enhanced provisions designed to encourage and protect whistleblowers in and outside of the financial industry. These new provisions expanded upon earlier provisions contained in the Sarbanes- Oxley Act of 2002 (“SOX”).