Anti-retaliation Under The SEC Whistleblower Program

Retaliation is one of the primary risks, if not the risk, associated with blowing the whistle on an employer.  Recognizing the financial and professional risks associated with whistleblowing, Congress included in the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) strong anti-retaliation provisions to protect whistleblowers who provide information to the SEC or Commodity Futures Trading Commission (the “CFTC”), assist in any investigation or legal action of the SEC or CFTC related to such information, or engage in any other protected activity under the Sarbanes-Oxley Act (“SOX”).

The Dodd-Frank Act creates a new private right of action for employees who have suffered retaliation “because of any lawful act done by the whistleblower – ‘(i) in providing information to the Commission in accordance with [the whistleblower incentive section]; (ii) in initiating, testifying in, or assisting in any investigation or judicial or administrative action of the Commission based upon or related to such information; or (iii) in making disclosures that are required or protected under the Sarbanes-Oxley Act of 2002,'” the Securities Exchange Act of 1934, and “‘any other law, rule, or regulation subject to the jurisdiction of the [SEC].'”

The Dodd-Frank Act does not limit the private right of action to employees; rather, the Dodd-Frank Act extends the protection to any individual claiming to have been threatened, harassed or subjected to discrimination because of conduct protected by the Dodd-Frank Act.  These private actions may be asserted directly in federal court and remedies may include reinstatement, double back pay (as opposed to just back pay, as under SOX) with interest, litigation costs, expert witness fees and reasonable attorneys’ fees.

With respect to whistleblowers who report violations of the commodities laws, the Dodd-Frank Act provides for reinstatement, back pay (as opposed to double back pay), and “special damages,” including attorneys’ fees and costs.  The Dodd-Frank Act does not provide for recovery of punitive damages.

In addition, the portion of the Dodd-Frank Act covering CFTC whistleblowers provides that its rights and remedies “may not be waived by any agreement, policy, form, or condition of employment, including by a predispute arbitration agreement,” and that “[n]o predispute arbitration agreement shall be valid or enforceable, if the agreement requires arbitration of a dispute arising under this section.” As a consequence, employers will not be able to compel arbitration of CFTC whistleblower claims, nor will they be able to include a release of CFTC whistleblower claims in their general releases or settlement agreements with employees.

The statute of limitations for bringing a claim for retaliation is six years after the date on which the retaliation occurred or three years after the date on which the facts material to the right of action are known or reasonably should be known to the employee, but not more than 10 years after the date of the violation.  The statute of limitations for whistleblowers reporting violations of commodities laws to the CFTC is two years.  There is no administrative exhaustion requirement to bring such an action in federal court, as is required under SOX for activity protected under that statute.

Bernstein Liebhard LLP is dedicated to providing experienced, dedicated, and aggressive representation for whistleblowers looking to report violations of the federal securities laws to the SEC.  Our attorneys will work closely with you and assist you in assessing your rights under the anti-retaliation provisions of the Dodd-Frank Act.  If you want to blow the whistle or have questions about your rights under the anti-retaliation provisions of the SEC Whistleblower Program, contact Michael S. Bigin or Laurence J. Hasson.