Although Dodd-Frank Explicitly Defines A “Whistleblower” In A Way That Only Includes Those Who Provide Information To The SEC, An Exception Has Been Carved Out That Is Rooted In A “Catch-All” Part Of The LawDodd-Frank’s “Catch-All” Provision Providing Whistleblower Status To Employees Who Make Certain Internal DisclosuresThe Dodd–Frank Act defines a whistleblower making disclosures under the SEC’s jurisdiction as follows: “The term ‘whistleblower’ means any individual who provides, or 2 or more individuals acting jointly who provide, information relating to a violation of the securities laws to the Commission, in a manner established, by rule or regulation, by the Commission.” 15 U.S.C. § 78u–6(a)(6) (emphasis added). But, on the other hand, in an apparent conflict, the anti-retaliation provisions of the Dodd-Frank Act protect whistleblowers from retaliation in three categories of circumstances, one of which that does not necessarily require reporting to the SEC, as follows:No employer may discharge . . . or in any other manner discriminate against, a whistleblower in the terms and conditions of employment because of any lawful act done by the whistleblower—(i) in providing information to the Commission in accordance with this section; (ii) in initiating, testifying in, or assisting in any investigation or judicial or administrative action of the Commission upon or related to such information; or (iii) in making disclosures that are required or protected under the Sarbanes–Oxley Act of 2002 (15 U.S.C. § 7201 et seq.), the Securities Exchange Act of 1934 (15 U.S.C. § 78a et seq.), including section 10A(m) of such Act (15 U.S.C. § 78f(m)), section 1513(e) of Title 18, and any other

This is especially so for private equity firms, who face the prospect of whistleblowers not only within the firm itself, but also in the portfolio companies in which they invest. Given their increased exposure to whistleblowers outside the U.S., entities must maintain robust compliance programs and internal controls over financial reporting wherever they operate, particularly given that issuer disclosure and FCPA violations remain significant categories of whistleblower tips.1. U.S. Securities and Exchange Commission, Whistleblower Program: 2019 Annual Report to Congress (“OWB Report”), at 22; available here.2.See id.3. OWB Report, supra note 1, at 1, 9, 22.4. U.S. Securities and Exchange Commission, Whistleblower Program: 2018 Annual Report to Congress, at 1, 9, available here.5. OWB Report, supra note 1, at 1.6.See Dodd-Frank Act, Pub. L. No. 111-203, 124 Stat. 1376, § 922 (2010), 15 U.S.C. § 78u-6. The statute defines “original information” to include information that is “derived from the independent knowledge or analysis of a whistleblower,” is not known to the SEC “from any other source, unless the whistleblower is the original source of the information,” and is not “exclusively derived” from an allegation in a judicial or administrative proceeding, government report, hearing, audit or investigation, or from the news media, unless the whistleblower is the source of the information.

Enacted in 2008, Dodd-Frank added a new provision to the Securities Exchange Act of 1934 governing whistleblowers. 15 U. S. C. §78u–6. The statute defines a “whistleblower” as “any individual who provides . . . information relating to a violation of the securities laws to the Commission, in a manner established, by rule or regulation, by the Commission.”

The Court's ruling dismissed a claim brought by Khaled Asadi against his former employer GE Energy USA LLC (GE Energy) because he had not provided "information" to the U.S. Securities and Exchange Commission (SEC). Asadi therefore did not qualify as a "whistleblower" as that term is defined under 15 U.S.C. § 78u-6(a)(6). The Fifth Circuit is the first Circuit court to consider the issue.

Can an employer legitimately restrict an employee’s right to share sensitive confidential information with others, including the SEC? There are no clear answers to these questions thus far, but there is little dispute that it remains an area of focus as the SEC continues its efforts to strengthen its whistleblower program.The SEC Tells the Second Circuit that Dodd-Frank Whistleblowers Need Not File a Whistleblower Report With the SEC On February 20, 2014 the SEC submitted an amicus brief to the United States Court of Appeals for the Second Circuit in Liu v. Siemens AG, No. 13-4385, in which the SEC pressed its view that whistleblowers need not report wrongdoing to the SEC in order for that person to be protected under the Dodd-Frank Act’s whistleblower anti-retaliation provision, 15 U.S.C. §78u-6(h)(1). The Second Circuit proceedings are being closely watched because district courts have been divided on the issue for several years.

Defendants moved to dismiss pursuant to Rule 12(b)(6), arguing that Plaintiff was not a protected whistleblower under Dodd-Frank because he had not provided such information to the SEC.The Court’s Ruling As an initial matter, the court recognized that, under Dodd-Frank, “[t]he term ‘whistleblower’ means any individual who provides, or 2 or more individuals acting jointly who provide, information relating to a violation of the securities laws to the Commission, in a manner established, by rule or regulation, by the Commission.” 15 U.S.C. § 78u-6(a)(6) (emphasis added). Thus, the court stated that the “plain language [of Section 78u-6(a)(6)] mandates that in order to qualify as a whistleblower, one must provide information to the SEC regarding an alleged federal securities law violation.”

Daly resolved a split on this issue among district courts within the Second Circuit, and joined the U.S. Court of Appeals for the Third Circuit and the majority of federal district courts permitting the arbitration of Dodd-Frank whistleblower retaliation claims.Daly reconciled the language of two separate whistleblower protection statutes: 18 U.S.C. § 1514A, first enacted as a provision of the Sarbanes-Oxley Act of 2002 (SOX), and 15 U.S.C. § 78u-6(h), introduced under Dodd-Frank. SOX prohibits certain companies from “discharg[ing]” or otherwise “discriminat[ing] against” an employee because the employee “provide[d] information” to a federal regulatory or law enforcement agency, or to their supervisor, “regarding any conduct which the employee reasonably believes constitutes a violation” of specified federal securities laws.

Important sections of the Final Rules relate to the retaliation protections for whistleblowers under Dodd-Frank, which broadly prohibits employers from discharging, demoting, suspending, threatening, directly or indirectly harassing, or “in any other manner” discriminating against a whistleblower in the terms or conditions of employment. 15 U.S.C. § 78u–6(h)(1)(A).Expansion of Who Is ProtectedThe Final Rules expressly state that the retaliation protections under Dodd-Frank apply regardless of whether a whistleblower is ultimately entitled to an award. Final Rules at 18.

SEC Regulatory Flexibility Act Agenda (Fall 2017), https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=201710&RIN=3235-AM11. [4] 119 F. Supp. 3d 1088, 1095-96 (N.D. Cal. 2015). [5] 17 C.F.R. § 240.21F-2(a)(1). [6] 15 U.S.C. 78u-6(h)(1)(A). [7] Somers v. Digital Realty Trust Inc. et al., No. 15-17352 (9th Cir. Mar. 8, 2017), http://cdn.ca9.uscourts.gov/datastore/opinions/2017/03/08/15-17352.pdf. [8] Oral Argument, Digital Realty Trust Inc. v. Somers, No. 16-1276 (2017), https://www.supremecourt.gov/oral_arguments/argument_transcripts/2017/16-1276_i426.pdf. [9] Digital Realty, 583 U.S. at *9 (internal quotation omitted).

SEC Regulatory Flexibility Act Agenda (Fall 2017), https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=201710&RIN=3235-AM11. [4] 119 F. Supp. 3d 1088, 1095-96 (N.D. Cal. 2015). [5] 17 C.F.R. § 240.21F-2(a)(1). [6] 15 U.S.C. 78u-6(h)(1)(A). [7] Somers v. Digital Realty Trust Inc. et al., No. 15-17352 (9th Cir. Mar. 8, 2017), http://cdn.ca9.uscourts.gov/datastore/opinions/2017/03/08/15-17352.pdf. [8] Oral Argument, Digital Realty Trust Inc. v. Somers, No. 16-1276 (2017), https://www.supremecourt.gov/oral_arguments/argument_transcripts/2017/16-1276_i426.pdf. [9] Digital Realty, 583 U.S. at *9 (internal quotation omitted).