United States: SEC Continues Its Efforts To Make Dodd-Frank Whistleblowing Easier

Last Updated: August 17 2015
Article by Edward T. Ellis, Kevin E. Griffith and Alexa J. Laborda Nelson

The Securities and Exchange Commission (SEC) recently issued interpretative guidance intended to advance the agency's position that a whistleblower is entitled to the anti-retaliation protections of the Dodd-Frank Wall Street Reform and Consumer Protection Act after making an internal complaint regarding possible securities law violations, even if the individual does not report directly to the SEC. The SEC's interpretation comes as no surprise, as it has taken this litigation stance since issuing its first Dodd-Frank regulation in 2011. The release of an official agency interpretation on August 4, 2015 may be the SEC's attempt to convince the courts to adopt its view. If the courts do, internal whistleblowers would have the benefit of Dodd-Frank's procedural process and remedies in addition to those under the Sarbanes-Oxley Act of 2002 (SOX).

The Basis for the SEC's Interpretation

The SEC admits the scope of the employment retaliation provision in Dodd-Frank is ambiguous. The Act unambiguously defines "whistleblower" as "any individual who provides... information relating to a violation of the securities laws to the Commission, in a manner established, by rule or regulation, by the Commission."1 Such whistleblowers can be awarded a "bounty" of 10% to 30% of the monetary sanction the SEC obtains using the information in a successful enforcement action if the information is "original" (as interpreted by the SEC) and the sanction exceeds $1 million.

But, as the SEC also notes, the Act later includes a "prohibition against retaliation" that the SEC refers to as a "catchall provision." The SEC argues that this prohibition protects not only whistleblowers who provide information to the Commission, but also whistleblowers who make "disclosures that are protected under the Sarbanes-Oxley Act of 2002... and any other law, rule, or regulation subject to the jurisdiction of the Commission."2 The SEC's view is that, because SOX protects internal reporting, this "catchall" language was intended to extend Dodd-Frank's workplace retaliation protection to individuals who internally report violations of the Securities Exchange Act or the SEC's rules. Since the "catchall" anti-retaliation provision applies expressly to workplace retaliation, the SEC argues it should supplement the specific definition of "whistleblower," adding another layer of protection for employees who complain internally.

Finally, ignoring the existence of SOX, the SEC reasons that protecting employees who only report externally to the SEC, and not those who report internally, would have a chilling effect on the remedial purposes behind Dodd-Frank of uncovering, stopping and penalizing SEC violations and internal corporate fraud. Under the SEC's interpretation, employees are provided equal employment retaliation protection both for internal and external reporting.

The Counterargument

Some courts have taken the position that the SEC's interpretation is not supported by the plain text of Dodd-Frank. For instance, the SEC's interpretation is directly at odds with a decision issued by the U.S. Court of Appeals for the Fifth Circuit and other lower court decisions, which have examined the Act and held that Dodd-Frank's whistleblower protections do not apply unless the employee has provided information directly to the SEC. Not surprisingly, the SEC views these interpretations negatively and is working hard to advance its own interpretation, which has also been embraced by some courts.

In short, courts are split on whether Dodd-Frank requires employees to report externally to the SEC in order to garner anti-retaliation workplace protection. The SEC's new interpretive guidance affirms the SEC's expansive reading of the Act to include internal whistleblowers within Dodd-Frank's anti-retaliation protections.

The Implications of the SEC's Interpretation

Dodd-Frank protection would make some of the relief available that is not available to a prevailing whistleblower in a retaliation action brought under SOX. For instance, while Dodd-Frank's remedies are similar to those available under SOX, Dodd- Frank also allows for recovery of double the amount of back pay lost. The procedure for initiating a Dodd-Frank claim also differs from that under SOX as it does not require a whistleblower to initiate a claim with the Department of Labor, and provides a longer statute of limitations.

Will Courts Adopt the SEC's Interpretation?

Federal agency regulations, interpretations, and other pronouncements, such as litigation postures, are afforded different levels of deference by the courts. For example, an agency action that requires notice and comment, such as a rule, may have the force of law under Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc.3 Under the Chevron deference doctrine, the SEC's interpretation could alter how courts view Dodd-Frank's whistleblower protections. While the Securities Exchange Act and Dodd-Frank Act give the SEC rulemaking power, nothing in the Chevron deference doctrine gives the SEC the right to interpret the statute beyond its plain language. To earn Chevron deference from the courts, the SEC's interpretation must be based on a permissible reading of the Act's plain language. That means that the SEC's interpretation as formally published in the Federal Register is really just an enhancement of its litigation position.

An agency's interpretive rule is afforded a lower level of deference under Skidmore v. Swift & Co.,4 in which a court uses a number of factors to evaluate an agency's "power to persuade." The question then becomes: what level of deference, if any, should the courts give to the SEC's interpretative guidance? Chevron, Skidmore, or one of the other types of deference the U.S. Supreme Court has developed over the years?

Looking Forward

It appears that the SEC hopes its interpretation will influence court assessments of the scope of Dodd-Frank retaliation claims. The SEC has already petitioned the U.S. District Court for the Northern District of California for permission to file an amicus brief in response to an employer's Motion to Dismiss a former employee's Dodd-Frank retaliation claim. The brief the SEC seeks to file is the same as one it previously filed. This time, however, the SEC's motion highlights its recent interpretative guidance. In support of its motion, the SEC argues that, as the federal agency charged with administering Dodd-Frank, the SEC is best positioned to assist the trial court with its interpretation of Dodd-Frank and whether the Act protects internal whistleblowing. Amicus briefs at the trial level are extremely rare, so the Northern District of California must determine whether to accept the SEC's offer of assistance.

Should the split among the federal district courts and circuit courts of appeal regarding the scope of Dodd-Frank's anti-retaliation protections continue to expand, the issue could wind up before the U.S. Supreme Court. While this plays out in the courts, publicly traded companies covered by Dodd-Frank should be aware of the SEC's clear and unmistakable insistence on an enlarged definition of "whistleblower" and continue to be vigilant with their anti-retaliation policies and practices.


1 See 15 U.S.C. § 78u-6(a)(6).

2  See 15 U.S.C. § 78u-6(h)(1)(A)(iii).

3  467 U.S. 837 (1984).

4  323 U.S. 134 (1944).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Edward T. Ellis
Kevin E. Griffith
In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.