Congress passed the “securities whistleblower incentives and protection” section of the Dodd-Frank Act (section 21F or the Dodd-Frank anti-retaliation provision) to protect “whistleblowers,” which it defines as those who report violations of the securities laws to the Securities and Exchange Commission (SEC). Section 21F also prohibits retaliation against whistleblowers in certain circumstances. The SEC has issued a rule under which an employee who complains of a securities law violation but does not report it to the SEC may still benefit from section 21F’s protections for “whistleblowers.” The Fifth Circuit has rejected the SEC rule and limited section 21F’s anti-retaliation protections to “whistleblowers” as defined in section 21F—those who report securities law violations to the SEC. In late 2015, the Second Circuit adopted the SEC rule and permitted an employee who did not report a securities law violation to the SEC to nonetheless take advantage of the generous anti-retaliation remedies under Dodd-Frank’s whistleblower provisions.
This circuit split raises important questions about the scope of Dodd-Frank’s whistleblower protections and the reach of the SEC and the courts in interpreting or expanding those protections.