Dodd-Frank whistleblowers must report concerns to SEC

To claim whistleblower protection under the Dodd-Frank Act, financial services workers must have filed complaints with the federal Securities and Exchange Commission. So ruled a unanimous U.S. Supreme Court on Feb. 21, rejecting the argument of a plaintiff who warned his bosses about possible violations of securities law but never took his concerns to the SEC.

Paul Somers was later fired, and he sued for retaliation under the whistleblower protection provisions of the Dodd–Frank Wall Street Reform and Consumer Protection Act.

The case, Somers v. Digital Realty Trust, made its way to the Supreme Court after Somers won at the trial court level and before the 9th Circuit Court of Appeals.

Dodd-Frank, enacted in 2010, placed tighter regulations on the financial industry to prevent abuses that caused the 2007 financial crisis. The law prohibits retaliation for providing “information relating to a violation of the securities laws to the Commission.”

On a 9-0 vote, the Supreme Court said that language was unambiguous. Internal complaints about wrongdoing are not protected. It held that by not communicating his concerns directly to the SEC, Somers was not entitled to protection under Dodd-Frank’s anti-retaliation provisions.