Thousands of Whistleblowers at Risk

Whistleblowers at Risk

Washington, D.C., November 27, 2017. On Tuesday, Nov. 28th the United States Supreme Court will hear oral argument in Digital Realty Trust v. Somers, the first whistleblower case under the Dodd-Frank Act (DFA) to reach the Supreme Court.

At issue is whether or not employees who raise concerns to their supervisors are protected under the DFA. Digital Realty, backed by the U.S. Chamber of Commerce, is arguing that “whistleblowers” under the DFA must disclose their concerns directly to the U.S. Securities and Exchange Commission (“SEC”) to be protected.

Attorneys for the whistleblower, Paul Somers, maintain that employees who disclose securities frauds directly to their managers or a company’s internal compliance program are fully protected under the DFA. The SEC, Senator Charles Grassley, and the National Whistleblower Center (among others) filed briefs in support of Mr. Somers.

Stephen M. Kohn, who is representing the amici National Whistleblower Center, explained how this case will impact thousands of whistleblowers:

“The vast majority of employees initially report fraud directly to their managers or internal compliance programs. Stripping internal whistleblowers of protections will result in the automatic dismissal of thousands of potential whistleblower cases. It will discourage employees from reporting concerns to their bosses, and will undermine investor confidence. Refusing to protect internal whistleblowers will have a catastrophic impact on corporate compliance programs.”

Kohn also explained the wide-reaching impact of the case: “The legal arguments raised by Digital and the Chamber are applicable to other whistleblower laws that have similar statutory definitions of whistleblowing, including the Commodity Exchange Act, whistleblower protections in the Clean Air, Water Pollution, Toxic Substances and Surface Mining laws, and all the major banking whistleblower laws, including those covering credit unions, FDIC-insured institutions, and international monetary transactions.”

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