In Murray v. UBS Securities LLC et al (12-CV-5914 S.D.N.Y.) the court found that an employee who reports violations of securities laws to his supervisor, but not the SEC, is entitled to the anti-retaliation protections for whistleblowers under the Dodd-Frank Act. Here, the plaintiff employee alleges he was pressured to write favorable research reports to support his employer’s ongoing CMBS trading and commercial loan originations. The plaintiff believes he was pressured to write research reports that were false and misleading. After complaining to his superiors and a number of interactions, plaintiff was fired. Since this was a motion to dismiss, the court was required to accept the plaintiff’s well-pleaded allegations as true in making its decision.
The court found it was not necessary to report unlawful conduct to the SEC to be entitled to the anti-retaliation protections of the Dodd-Frank Act for whistleblowers. The court noted that when the SEC adopted the whistleblower rules, the SEC stated that “[t]he second prong of the Rule 21F-2(b)(1) standard provides that, for purposes of the anti-retaliation protections, an individual must provide the information in a manner described in Section 21F(h)(1)(A). This change to the rule reflects the fact that the statutory anti-retaliation protections apply to three different categories of whistleblowers, and the third category includes individuals who report to persons or governmental authorities other than the Commission” (emphasis in the original). The court also found that the SEC’s interpretation of the Dodd-Frank Act was entitled to deference under applicable judicial standards.