The Second Circuit recently entertained oral argument in Berman v. Neo@Ogilvy, focusing on whether the Dodd-Frank whistleblower protection provision covers individuals who only complain internally about alleged securities law violations rather than reaching out to the SEC. We previously posted on the Southern District of New York’s December 5, 2014 ruling in this matter that internal reports are not protected under Dodd-Frank, as was held in the Asadi case out of the Fifth Circuit. We also discussed the SEC’s amicus brief in this matter here.
According to an article in Law360 (subscription required), the three-judge panel, comprised of Judges Jacobs, Newman and Calabresi, appeared divided over the proper interpretation of the Dodd-Frank whistleblower provision. Berman’s counsel and the SEC’s counsel urged the court to depart from Asadi—the only federal appellate decision to address this issue. They contended that that the definition of “whistleblower” that the Asadi court adopted is at odds with the Congressional intent and relied on the language in 15 U.S.C. § 78u-6(h)(1)(A)(iii), prohibiting retaliation against individuals who made disclosures “required or protected under the Sarbanes-Oxley Act and any other law, rule or regulation subject to the jurisdiction of the SEC.” And the SEC relied on the rules it promulgated at 17 C.F.R. Part 240.21F-2(b)(1). Defense counsel, by contrast, argued that the plain language in Dodd-Frank requires a covered individual make a complaint to the SEC. Dodd-Frank defines “whistleblower” as “any individual who provides … information relating to a violation of the securities law to the Commission, in a manner established, by rule or regulation, by the [SEC].” 15 U.S.C.§ 78u-6(a)(6) (emphasis added).
This case is being monitored closely because district courts are sharply divided on this issue and a split between the Second and Fifth Circuits could lead to a Supreme Court decision.