Among the 2,319 pages of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the paragraph addressing the scope of the law's whistleblower protections has occasioned some of the sharpest disagreements. Is a corporate employee who reports an employer's possible violation of the securities laws to a supervisor or internal compliance officer—but not to the Securities and Exchange Commission—considered a "whistleblower" entitled to protection under Dodd-Frank? Last month, in the first federal circuit court decision on the subject, the U.S. Court of Appeals for the Fifth Circuit in Asadi v. GE Energy (USA),1 held that the anti-retaliation protection contained in the whistleblower provision of Dodd-Frank creates a private right of action only for individuals who provide information relating to a violation of the securities laws to the SEC.
Asadi rejected several district court decisions (including very recent Southern District of New York authority) and the view embodied in the SEC's implementing regulation extending Dodd-Frank's whistleblower protections to individuals who report internally and not to the SEC. The Fifth Circuit's decision limiting Dodd-Frank's anti-retaliation provision to employees who report potential securities law violations to the SEC certainly may narrow the universe of potential retaliation claimants. But it may have unintended consequences.
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