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Home Legislation

Court Ruling Threatens Internal Compliance Programs

Mary Jane WilmothbyMary Jane Wilmoth
December 22, 2015
in Legislation, News, SEC
Reading Time: 1 min read
SEC Says Employees Protected For Internal Whistleblowing

U.S. Securities and Exchange Commission building in Washington, D.C. September 4, 2014. Photo by Diego M. Radzinschi/THE NATIONAL LAW JOURNAL.

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Washington, D.C. December 22, 2015. On December 8, 2015, the Eastern District of Tennessee dismissed a whistleblower’s claims, finding that the Plaintiff was not entitled to protection under the whistleblower provisions of the Dodd-Frank Act. Verble v. Morgan Stanley Smith Barney LLC et al., 3:15-cv-00074 (E.D. Tenn. Dec. 8, 2015). The court’s decision further divides the split amongst circuits regarding the scope of the Dodd-Frank’s whistleblower protection provision.

The whistleblower, John S. Verble, was a financial advisor at Morgan Stanley who assisted the FBI in an investigation against the company as a confidential informant. He was terminated in 2013 and then filed his claim for whistleblower retaliation under the Dodd-Frank Act.

The Court held that reporting to “governmental authorities other than the Commission” and making reports to internal compliance departments is not protected under Dodd-Frank.

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“This ruling is at war with whistleblowers,” stated National Whistleblower Center Executive Director Stephen M. Kohn. He explained, “It undermines corporate compliance programs and threatens every employee who raises concerns with termination. Under this ruling I advise whistleblowers to use the SEC’s confidential and anonymous reporting program when they want to report violations.”

“By discouraging employees from making internal reports, corporate America is cutting off its nose to spite its face,” Kohn surmised.

Tags: SECSecurities and Commodities FraudSecurities and Exchange CommissionStephen M. Kohn
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Mary Jane Wilmoth

Mary Jane Wilmoth

Mary Jane Wilmoth is the publisher of Whistleblower Network News, where she heads the editorial staff. She writes about breaking whistleblower news, and False Claims Act whistleblowers, SEC whistleblowers, IRS whistleblowers, FCPA whistleblowers, and CFTC whistleblowers. Mary Jane is the managing partner at the whistleblower law firm Kohn, Kohn & Colapinto, and a frequent contributor to The Whistleblower and Qui Tam Blog. She is a licensed attorney in the District of Columbia and a graduate of the University of New Hampshire School of Law (formerly Franklin Pierce Law Center).

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Top 10 Whistleblower Protection Blog’s Posts of 2015

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