A federal district court ruled in May that whistleblowers don’t have to report to the SEC to receive protection against retaliation by their employers.
Judge John Gerrard in Nebraska issued the ruling in Bussing v. COR Clearing LLC.
He said that while the Dodd-Frank Act’s whistleblower bounty program compels tipsters to report wrongdoing to the SEC, the provision covering retaliation has no such requirement.
The ruling conflicts with a federal appeals court decision in the Asadi case in July 2013. The Fifth Circuit Court of Appeals held that employees have to report their grievances to the SEC to be protected from retaliation.
But Judge Gerrard said Asadi doesn’t account for workers who often report securities law violations internally before complaining to the SEC.
His ruling allows the term “whistleblower” to be broadly defined, triggering protection equally to employees who raise concerns internally or to outside authorities.
“This interpretation gives effect to the full range of disclosures protected by the anti-retaliation provision, while reserving rewards under the bounty program for whistleblowers who report to the SEC,” the ruling said.
The plaintiff in Bussing disclosed the findings of an internal investigation to the Financial Industry Regulatory Authority (FINRA) over the objections of her employers.
She was fired after she participated in a FINRA onsite examination based on her complaint.
By disclosing her findings to FINRA, Judge Gerrard said, she complied with Dodd-Frank’s whistleblower requirements.
Julie DiMauro is the executive editor of FCPA Blog and can be reached here.