The U.S. Supreme Court has held that to be covered by the anti-retaliation provisions of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, a whistleblower must report a violation of the securities laws directly to the Securities and Exchange Commission. The February 21 decision was made in the case of Digital Realty Trust, Inc. v. Sommers. Paul Somers alleged that Digital Realty Trust terminated his employment as a vice president shortly after he reported to senior management suspected securities-law violations by the company. He then alerted the SEC. Mr. Somers filed a suit claiming whistleblower protection under Dodd-Frank. The Supreme Court held that Dodd-Frank’s anti-retaliation provision did not extend to Mr. Somers as he had not reported the suspected violations to the SEC prior to his termination.

In the documents presented to the Supreme Court, concern had been expressed that the court’s determination might jettison protection for auditors, attorneys and other employees who are subject to internal reporting requirements, since Sarbanes-Oxley directs auditors and attorneys to report certain information within the company before making disclosures externally.

Delivering the opinion of the Court, Justice Ruth Ginsberg wrote: “Our reading shields employees in these circumstances, however, as soon as they also provide relevant information to the Commission. True, such employees will remain ineligible for Dodd-Frank’s protection until they tell the SEC, but this result is consistent with Congress’ aim to encourage SEC disclosures.…Somers worries that lawyers and auditors will face retaliation quickly, before they have a chance to report to the SEC [Brief for Respondent 35-36]. But he offers nothing to show that Congress had this in mind when it enacted §78u-6(h). Indeed, Congress may well have considered adequate the safeguards already afforded by Sarbanes-Oxley, protections specifically designed to shield lawyers, accountants, and similar professionals.”

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