[authors: Bryan B. House, Pamela L. Johnston, Michael P. Matthews, Lisa M. Noller, Kenneth B. Winer]

In enacting the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), Congress provided a private right of action for employees who claimed retaliatory discharge under certain circumstances. The Act defined a “whistleblower” in an apparently narrow manner — in particular, as “any individual who provides, or 2 or more individuals acting jointly who provide, information relating to a violation of the Securities laws to [the SEC] in a manner established, by rule or regulation, by [the SEC].” 15 U.S.C. § 78u-6(a)(6) (2012). A narrow reading of this definition could lead to limited recovery to circumstances in which an individual reported his observations to the SEC. However, in three reported decisions, including one reported last week, federal district courts have interpreted Dodd-Frank to afford broad protections to whistleblowers, and have not required that complaints be reported to the SEC.

In Egan v. Tradescreen, Inc., et al., 2011 U.S.Dist. LEXIS 47713 (S.D.N.Y. May 4, 2011), the plaintiff alleged he was terminated after he made reports to his superiors of malfeasance, witness interference, and violations of the Sarbanes-Oxley Act and FINRA rules. In the first reported analysis of this provision of the Dodd-Frank Act, the court ruled that to recover, the plaintiff was not required to complain to the SEC prior to filing his lawsuit. In Nollner v. Southern Baptist Convention, Inc., et al., 852 F.Supp.2d 986 (M.D.Tenn. 2012), plaintiffs alleged their employment was terminated following a complaint that their employer’s conduct violated the FCPA. The court followed Egan’s reasoning, and also held that plaintiffs were not required to report their concerns to the SEC.