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Second Circuit Adopts Broad Interpretation of Dodd-Frank’s Anti-Retaliation Provision

On September 10, 2015, a divided Second Circuit appeals court held in Berman v. Neo@Ogilvy LLC, that an employee who reports wrongdoing internally to management is considered a “whistleblower” under the Dodd-Frank Act, thereby strengthening retaliation protections for employee whistleblowers.

There has been a history of tension between the Dodd-Frank statutory definition of “whistleblower” and the applicability of the Dodd-Frank anti-retaliation provisions to employees who report suspected misconduct internally.    The Act defines a “whistleblower” as “any individual who provides…information relating to a violation of the securities laws to the Commission…”  However, section 78u-6(h)(1)(A)(iii) of the Act prohibits retaliation against “a whistleblower” who makes disclosures “required or protected” by the Sarbanes-Oxley Act.  The U.S. Securities and Exchange Commission’s regulations interpret the term “whistleblower” to include for retaliation purposes employees who report or disclose potential wrongdoing either internally or to the SEC (SEC Rule 21F-2(b)(1)).  This has led to a Circuit split among federal courts as to whether or not Dodd-Frank protects against retaliation only if the whistleblower reports the wrongdoing to the SEC, or if its protections also extend to whistleblowers who report misconduct internally to  management.

Read Bryan Cave’s client alert on the Second Court’s Decision in Berman v. Neo@Ogilvy LLC.

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Investor Protections in the Dodd-Frank Regulatory Reform Bill

On June 28, 2010, the House and Senate conferees approved the financial regulatory reform conference report (known as the “Dodd-Frank Wall Street Reform and Consumer Protection Act”), and on June 30, 2010, the House approved a bill that has almost was almost identical to the conference report, except for a change in the so-called “pay-for” amendment (as discussed here). The Senate is now poised to vote on the legislation. As expected, the final version of the bill incorporates provisions to increase investors protections (see Title IX, Subtitle A) and to increase regulatory enforcement and remedies (see Title IX, Subtitle B).

 Increasing Investor Protection

The regulatory reform bill would establish within the SEC three new “advocates” for investor protection: the Investor Advisory Committee, the Office of the Investor Advocate, and ombudsman.

The Investor Advisory Committee will advise and consult with the SEC regarding a number of issues related to investor protection, including the regulatory priorities of the SEC; issues related to regulating securities products, trading strategies, fee structures, and the effectiveness of existing disclosure requirements; initiatives to protect investors; and initiatives to promote investor confidence and the integrity of the securities marketplace. This Committee’s members will be appointed for four years and will consist of the Investor Advocate (discussed below), a representative of the State securities commission, a representative of the interests of senior citizens, and not fewer than 10 or more than 20 members representing individual equity and debt investors, and institutional investors who are knowledgeable about investment issues and have reputations for integrity.

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