On August 24, 2017, petitioner Digital Realty Trust, Inc. ("Digital Realty") filed its brief on the merits in Digital Realty Trust, Inc. v. Somers. The Supreme Court took up Digital Realty's petition for certiorari in late June, following the Ninth Circuit's ruling that employees who report securities violations internally, but not to the SEC, are nonetheless protected by the anti-retaliation provision in Dodd-Frank. Somers v. Digital Realty Tr. Inc., 850 F.3d 1045 (9th Cir. 2017). The Supreme Court will now resolve a two-year old circuit split in determining whether Dodd-Frank protections apply to internal whistleblowing (a position adopted by the Ninth Circuit, Second Circuit, and the SEC itself), or whether such protections apply only to whistleblowers who report violations directly to the SEC, as was found by the Fifth Circuit in Asadi v. G.E. Energy (USA), LLC, 720 F.3d 620, 621 (5th Cir. 2013).
In its brief, Digital Realty's chief argument centers around Dodd-Frank's statutory language defining a whistleblower as an "individual who provides . . . information relating to a violation of the securities laws to the [Securities and Exchange] Commission" (15 USC 78u-6). Digital Realty argues that this definition excludes employees, such as Digital Realty Trust Vice President Paul Somers, who did not make any reports to the SEC and, thus, are not whistleblowers entitled to protection under the statute. Digital Realty contrasted the Dodd-Frank provision with the broader statutory language of the Sarbanes-Oxley whistleblower protections, which cover all employees who engage in whistleblowing internally and to the SEC. Digital Realty also argued that the SEC, which has adopted a broad whistleblower rule protecting internal employee reporting, should not be given deference where the statutory language is clear and the SEC's rulemaking process was flawed.
Mr. Somers has until October 10, 2017 to file a brief.
The SEC awarded more than $1.7 million to a whistleblower for reporting "critical information to help stop a fraud that would have otherwise been difficult to detect."
The SEC awarded nearly $2.5 million to a whistleblower from a domestic government agency for reporting the "improper conduct" of a company.
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