Both the Sarbanes-Oxley Act of 2002, 116 Stat. 745, and the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, 124 Stat. 1376, shield whistleblowers from retaliation. Sarbanes-Oxley applies to all “employees” who report misconduct to the Securities and Exchange Commission (SEC or Commission), any other federal agency, Congress, or an internal supervisor. 18 U.S.C.S. § 1514A(a)(1). Dodd-Frank delineates a more circumscribed class; it defines “whistleblower” to mean a person who provides information relating to a violation of the securities laws to the Commission.
Respondent Paul Somers alleged that petitioner Digital Realty Trust, Inc. (Digital Realty) terminated his employment shortly after he reported to senior management suspected securities-law violations by the company. Somers filed suit, alleging, inter alia, a claim of whistleblower retaliation under the Dodd-Frank Act. Digital Realty moved to dismiss that claim on the ground that Somers was not a whistleblower under the said Act because he did not alert the SEC prior to his termination. The District Court denied the motion, and the Ninth Circuit affirmed. The Court of Appeals concluded that the Act does not necessitate recourse to the SEC prior to gaining “whistleblower” status, and it accorded deference to the SEC's regulation under Chevron U. S. A. Inc. v. Natural Resources Defe
Does the Dodd-Frank's anti-retaliation provision extend to an individual, like respondent, who has not reported a violation of the securities laws to the SEC?
A former employee, who was terminated shortly after he reported to senior management suspected securities law violations by the company, but who did not provide information to the SEC before his termination, was not a whistleblower entitled to relief under the anti-retaliation provision of the Dodd-Frank Act because the provision did not include an individual who did not report a securities law violation to the SEC. The Act defined a whistleblower as a person who provided information relating to a securities law violation to the SEC. Dodd-Frank's purpose and design corroborated this SEC reporting requirement.