On February 6, the SEC filed its third amicus brief defending its interpretive rule on Dodd-Frank's anti-retaliation provision, 15 U.S.C. §78u-6(h)(1). The impetus is a ruling out of the Southern District of New York in Berman v. Neo@Ogilvy, No. 14-cv-523, which follows the Fifth Circuit Asadi decision concluding that the Dodd-Frank anti-retaliation provision does not cover internal complaints. The district court in Berman dismissed the plaintiff's lawsuit because he made only an internal report, and an appeal the Second Circuit ensued.
This amicus brief is substantially similar to the SEC briefs filed in Liu Meng-Lin v. Siemens AG (Second Circuit) and Safarian v. American DG Energy (Third Circuit), with one notable exception. The SEC's most recent brief now argues that failing to defer to its interpretation could "arbitrarily and irrationally deny" whistleblowers protection who first report violations to the DOJ, FBI or other self-regulatory organizations (e.g., FINRA). In support, the SEC argues that the Dodd-Frank bounty program requires the SEC to pay an award based on monetary sanctions collected in "related actions." It contends that because Dodd-Frank's whistleblower protections "complement the related component of the award program" there is no basis to believe that Congress had intended for "disparate treatment based purely on the happenstance of which agency the individual reported to first."
Whether the Second Circuit will find the SEC's new argument persuasive remains to be seen. If the Second Circuit adopts the SEC's position, this could lead to a split with the Fifth Circuit, which could lead to a U.S. Supreme Court decision.
Another SEC Whistleblower Amicus Brief On Whether Dodd-Frank Covers Internal Complaints
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