Digital Realty Trust, Inc. v. Somers
583 U.S. 149, 138 S. Ct. 767, 200 L. Ed. 2d 15 (2018)
Supreme Court of the United States · February 21, 2018
What the court decided
An employee who reported suspected securities-law violations to senior management, but not to the Securities and Exchange Commission, was fired and sued under the Dodd-Frank Act's anti-retaliation provision. The Supreme Court held that Dodd-Frank protects only a "whistleblower" as the statute defines the term: someone who provided information about a violation to the SEC. Because he had not reported to the SEC before he was fired, he was not covered. Employees who report only internally may still be protected by the Sarbanes-Oxley Act, which has its own 180-day deadline for filing with the Department of Labor.
Who won
The employer won. The Supreme Court unanimously reversed the Ninth Circuit and sent the case back.
Why it matters for financial advisors
If you are thinking about reporting securities misconduct, where you report matters. A report to the SEC brings Dodd-Frank protection; an internal report alone does not, and a Sarbanes-Oxley complaint must be filed quickly.
Key passage: 583 U.S. 149 at 160-63.
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