The head of the U.S. Securities and Exchange Commission's whistleblower office defended broad anti-retaliation protections for corporate insiders on Wednesday, just days after the U.S. Supreme Court agreed to consider when employees are entitled to those safeguards under the Dodd-Frank Act.

Federal appeals courts are split over whether a whistleblower is only protected under Dodd-Frank for bringing information “to the commission.” The SEC has interpreted the law to extend protection against retaliation evinen to those who only flag wrongdoing to their employers. Two federal appellate courts have endorsed the agency's approach, creating a split with the U.S. Court of Appeals for the Fifth Circuit's view that employees need to bring information to the SEC in order to receive protection.

Jane Norberg, who was named director of the SEC whistleblower office in September, said Wednesday that the agency's interpretation of anti-retaliation protections should be favored by companies for making employees more comfortable reporting potential misconduct internally. If the agency's more expansive view of anti-retaliation protections were scaled back, she said, “then the very first time that companies hear about a securities violation may be when the SEC knocks on their door instead of [through] an internal whistleblower.”

“In my view, any other reading would be completely inconsistent with the incentives that the commission put in place to encourage internal reporting,” Norberg, a panelist at a Practising Law Institute event in New York, said. “And I also think, honestly, that any other interpretation would ultimately discourage employees from reporting internally.”

“The ironic part of all of this is that some of the same companies that commented during the rulemaking process about requiring internal reporting or incentivizing internal reporting are some of the very same companies who are in court now challenging an employee's right to bring a whistleblower retaliation lawsuit for reporting the information internally,” she said. “So, in my view, this is a little bit of a thorny issue and a case of 'be careful of what you wish for.'”

Norberg did not name any particular companies. But one stands out for challenging the scope of whistleblower protections after pushing for rules that would encourage internal reporting.

In 2010, as the SEC was building out the whistleblower program, General Electric joined Google, Microsoft and JPMorgan Chase & Co. in raising concerns that the agency's rules would “unnecessarily weaken internal corporate compliance programs.”

Three years later, General Electric was the winner in the Fifth Circuit decision that strictly interpreted the Dodd-Frank Act to define a whistleblower as someone who reports misconduct to the SEC. The ruling upheld a lower court's dismissal of a retaliation claim brought by Khaled Asadi, who alleged that he was fired for raising concerns internally about a possible violation of the Foreign Corrupt Practices Act.

The Supreme Court will grapple with the scope of whistleblower protections in a challenge that's coming up from the U.S. Court of Appeals for the Ninth Circuit. A divided panel in March—ruling in Digital Realty Trust v. Somers—endorsed the SEC's position that corporate insiders need not bring tips “to the commission” in order to receive whistleblower protections. The U.S. Court of Appeals for the Second Circuit had previously upheld the SEC's more expansive view of anti-retaliation protections.

In January, the Sixth Circuit skirted the question of whether protections against retaliation extend only to whistleblowers to report to the SEC. The court ruled unanimously against John Verble, a former Morgan Stanley Smith Barney financial adviser who claims he was fired in 2013 for cooperating with the FBI in an investigation.

The head of the U.S. Securities and Exchange Commission's whistleblower office defended broad anti-retaliation protections for corporate insiders on Wednesday, just days after the U.S. Supreme Court agreed to consider when employees are entitled to those safeguards under the Dodd-Frank Act.

Federal appeals courts are split over whether a whistleblower is only protected under Dodd-Frank for bringing information “to the commission.” The SEC has interpreted the law to extend protection against retaliation evinen to those who only flag wrongdoing to their employers. Two federal appellate courts have endorsed the agency's approach, creating a split with the U.S. Court of Appeals for the Fifth Circuit's view that employees need to bring information to the SEC in order to receive protection.

Jane Norberg, who was named director of the SEC whistleblower office in September, said Wednesday that the agency's interpretation of anti-retaliation protections should be favored by companies for making employees more comfortable reporting potential misconduct internally. If the agency's more expansive view of anti-retaliation protections were scaled back, she said, “then the very first time that companies hear about a securities violation may be when the SEC knocks on their door instead of [through] an internal whistleblower.”

“In my view, any other reading would be completely inconsistent with the incentives that the commission put in place to encourage internal reporting,” Norberg, a panelist at a Practising Law Institute event in New York, said. “And I also think, honestly, that any other interpretation would ultimately discourage employees from reporting internally.”

“The ironic part of all of this is that some of the same companies that commented during the rulemaking process about requiring internal reporting or incentivizing internal reporting are some of the very same companies who are in court now challenging an employee's right to bring a whistleblower retaliation lawsuit for reporting the information internally,” she said. “So, in my view, this is a little bit of a thorny issue and a case of 'be careful of what you wish for.'”

Norberg did not name any particular companies. But one stands out for challenging the scope of whistleblower protections after pushing for rules that would encourage internal reporting.

In 2010, as the SEC was building out the whistleblower program, General Electric joined Google, Microsoft and JPMorgan Chase & Co. in raising concerns that the agency's rules would “unnecessarily weaken internal corporate compliance programs.”

Three years later, General Electric was the winner in the Fifth Circuit decision that strictly interpreted the Dodd-Frank Act to define a whistleblower as someone who reports misconduct to the SEC. The ruling upheld a lower court's dismissal of a retaliation claim brought by Khaled Asadi, who alleged that he was fired for raising concerns internally about a possible violation of the Foreign Corrupt Practices Act.

The Supreme Court will grapple with the scope of whistleblower protections in a challenge that's coming up from the U.S. Court of Appeals for the Ninth Circuit. A divided panel in March—ruling in Digital Realty Trust v. Somers—endorsed the SEC's position that corporate insiders need not bring tips “to the commission” in order to receive whistleblower protections. The U.S. Court of Appeals for the Second Circuit had previously upheld the SEC's more expansive view of anti-retaliation protections.