Federal Courts Bars Extraterritorial Application of Dodd-Frank’s Anti-Retaliation Provision to Whistleblowers Employed Abroad

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In Asadi v. G.E. Energy (USA), LLC, a federal district court in Texas held that Dodd-Frank’s anti-retaliation protections for SEC whistleblowers do not apply to employees stationed abroad. Although the Asadi holding may not bind other courts, it represents an important step toward defining the scope of Dodd-Frank’s broad remedies for whistleblowers.

Section 922 of the Dodd-Frank Wall Street Reform and Consumer Protection Act created a host of new protections and incentives for whistleblowers who bring information about potential violations of the securities laws to the Securities and Exchange Commission. Among the most significant changes was a new cause of action (under § 21F of the Securities Exchange Act of 1934) for employees who suffer retaliation for sharing information with the SEC; initiating, testifying in, or assisting in a related enforcement action; or making certain disclosures required or protected by law. Employees who claim retaliatory discrimination under this provision can sue directly in federal court, and those who prevail are entitled to reinstatement, double back pay, and attorney’s fees.

The plaintiff in Asadi was a U.S.-based employee of GE Energy who had agreed to “temporarily relocate” to Jordan, where he coordinated with Iraq’s governing bodies to secure and manage energy-service contracts. Asadi claimed that during the course of his employment overseas, he learned that GE had made allegedly corrupt efforts to hire a woman “closely associated” with an Iraqi energy official. He then reported his concerns to company officials.

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