- 23 June, 2014
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J.L. Spray recently received a favorable ruling from federal District of Nebraska Judge John Gerrard in Bussing v. COR Clearing, et al., U.S. District Court for the District of Nebraska Case No. 8:12-CV-238, holding that the Dodd-Frank Act’s whistleblower retaliation provisions protect disclosures made by our client, even though she reported internally and to FINRA (the Financial Industry Regulatory Association) rather than directly to the SEC (Securities and Exchange Commission).
The issue is a hot one across the country. The only Circuit Court to consider the issue has taken a narrow, strict view of the Act, ruling that only disclosures directly to the SEC are protected. Asadi v. GE Energy, LLC, 720 F.3d 620 (5th Cir. 2013). However, most of the other district courts before and after Asadi have disagreed, often deferring to the SEC’s whistleblower regulation, which offers broader protections.
In his ruling, Judge Gerrard took a new approach, analyzing the Act, its legislative history, and the policy implications of narrowly limiting Dodd-Frank protections. Specifically, Judge Gerrard noted that the Asadi approach would exclude the “majority of whistleblowers,” and “those who are most vulnerable to retaliation” who report to their supervisor or otherwise look for an internal solution first. Such internal reporting is efficient and shouldn’t be discouraged, because it:
- “allows companies to remedy improper conduct at an early stage, perhaps before it rises to the level of a violation.”
- reinforces internal compliance programs.
- “prevents simple misunderstandings from transforming into investigations that waste corporate and government resources.”
- helps “vet” tips, “so that the SEC receives fewer and higher quality reports from whistleblowers.”
Judge Gerrard’s full Order can be read here.