Dodd-Frank Whistleblower Retaliation Protections

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One of the features of the Dodd-Frank reforms enacted after the Great Financial Crisis of 2008 was the institution of a rewards program for corporate insiders who blow the whistle on future financial misdeeds. One might think that well-run corporations would be heartily in favor of employees eagerly stamping out the sort of behavior that led to the last crisis, but that is not always how human nature works.

Often, those who use the theoretical shield offered by Dodd-Frank whistleblower retaliation protection are subject to the same sort of hostile reception which all other whistleblowers face. Namely that despite the law’s clear legal proscriptions, Dodd-Frank whistleblowers sometimes find themselves being suddenly terminated for a host of specious reasons rather than being praised and rewarded for their honesty and diligence.

Whistleblowing potentially impacts the future bonuses and even continued employment of the supervisory personnel who should have been guarding the henhouse in the first place. As a result, they often prefer to bury the matter, even if they agree that an abuse happened and that it needs to be cleaned up in the future. When it comes to burying such unwelcome facts, it is not uncommon to shove the poor whistleblower down into the hole, as well.

Given this reality, it would be nice if the SEC actually exerted a genuine effort to protect whistleblowers, but it does not do enough. A lot more corruption and scandal would be uncovered if the witnesses knew that an army of government lawyers had their back, but the truth is that the people who expose malfeasance are often left to their own devices. Dodd-Frank whistleblower retaliation protections are real, but it is up to the actual whistleblower to uphold their own lawful right to its protections.

At the moment, whistleblowers and their chosen legal representatives are basically on their own in the need to prove their case, despite the theoretical cover offered by Dodd-Frank. There is one interesting case currently before the US Supreme Court which could provide some small additional protection to those who report financial crimes.

Currently, whistleblowers must report their findings to the Securities and Exchange Commission in order to be eligible for any of the protections or bonus awards. This also heightens the likelihood of them being exposed and subject to persecution. However, several cases in the various Courts of Appeal have offered divergent opinions as to whether the Dodd-Frank provisions extend to whistleblowers who merely report their findings internally to their company rather than going the SEC route.

If this is upheld, it would take a lot of pressure off of those who wish to do the right thing but rightly fear retaliation. There would be powerful incentive for companies to protect and reward those who choose to keep the matter internalized while still holding out the potential of full SEC involvement if the issue is not properly addressed. Giving everyone the opportunity to work together to solve a problem seems like a much better solution than turning every party into an adversary fighting against every one of the others.

For help with your SEC whistleblower case, contact an experienced firm such as Meissner Associates in New York.