Home » Dodd-Frank Act » Another Federal Court Agrees that Securities Fraud Whistleblowers Must Blow the Whistle to the SEC for Dodd-Frank Protection

Another Federal Court Agrees that Securities Fraud Whistleblowers Must Blow the Whistle to the SEC for Dodd-Frank Protection

Several weeks ago, this blog discussed the Fifth Circuit’s determination in Asadi v. G.E. Energy, LLC that for an employee-whistleblower to be protected by the Dodd-Frank Act, she must “provide information relating to a violation of the securities laws to the SEC.” Internal complaints alone are not sufficient, at least in the Fifth Circuit, to invoke the statute’s whistleblower protection provision. Asadi

Consistent with the Fifth Circuit’s decision in Asadi, a federal court in the Eastern District of Wisconsin recently arrived at the same conclusion, ruling that the Dodd-Frank whistleblower protection provision does not protect an employee who only reports alleged securities law violations internally. Instead, the plain language of the statute, according to the court, requires that the alleged violation be reported to the SEC to be covered by Dodd-Frank’s whistleblower protection provision. “The statute is simple enough to understand. Reporting to the SEC is the precondition that triggers the anti-retaliation protections of the statute.”

Although there are pre-Asadi decisions suggesting statutory ambiguity permits claims to proceed without an actual report to the SEC, the wiser course for whistleblowers is to report alleged securities law violations to the SEC. And for employers, the lack of such a report may provide the basis for dismissing litigation.

Verfuerth v. Orion Energy Sys., Inc., No. 14-cv-352 (E.D. Wis.)


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Categories

%d bloggers like this: