SEC Files Amicus Brief in Support of Protecting Whistleblowers from Retaliation (with Seidel Comment)

The SEC filed an amicus brief in support of appellant and former Siemens A.G. compliance officer, Liu Meng-Lin, who brought a lawsuit against Siemens claiming that its Chinese subsidiary used kickbacks to boost medical equipment sales.On October 21, 2013, U.S. District Judge William Pauley dismissed the lawsuit, ruling that Dodd-Frank's anti-retaliation protections for whistleblowers do not apply outside the United States.

The SEC amicus brief urged the U.S. Court of Appeals for the Second Circuit to defer to the SEC rule that clarified "an ambiguity in the whistleblower employment anti-retaliation provisions" in Exchange Act Section 21F(H)(1) ("Securities Whistleblower Incentives and Protection") and hold that individuals are entitled to the employment anti-retaliation protection if they make any of the disclosures identified in Exchange Act Section 21F(h)(1)(A)(ii) irrespective of whether they separately report the information to the SEC.

SEC Office of the Whistleblower Chief Sean McKessy issued a statement regarding the SEC's court filing, stating that the filing "makes clear that under SEC rules, whistleblowers are entitled to protection regardless of whether they report wrongdoing to their employer or to the Commission." McKessy said the brief supports the anti-retaliation protections under Dodd-Frank that "are critical to the success of the SEC's whistleblower program."

Lofchie Comment: Interestingly, the SEC brief does not take on the jurisdictional isue that was the principal reason for the adverse ruling: the case involved a Chinese employee of a Chinese company that is a subsidiary of a German company, and all of the relevant activity occurred outside the United States.

See: SEC Amicus Brief; Statement of Sean McKessy.Related news: U.S. District Judge Pauley Rules That Dodd-Frank Whistleblower Provisions Do Not Apply Outside the United States (with Lofchie Comment) (October 22, 2013). Relevant Cadwalader Articles: The Dodd-Frank Whistleblower Program: An Analysis of the SEC's Second Annual Report, Best Practices for Dealing with Whistleblowers, and Recent Cases Interpreting the Scope of the Anti-Retaliation Provisions of the Dodd-Frank Act; The Dodd-Frank Whistleblower Provisions: Considerations for Effectively Preparing for and Responding to Whistleblowers.