SCOTUS Says You Must Tell the SEC

Last week, the U.S. Supreme Court settled an important question for the SEC’s whistleblower program. That program awards you money for reporting corporate misdeeds to the Commission. It also protects you from retaliation because you can sue to recover your position, double your back pay, and accrued interest, legal fees, and litigation costs.

Well, the Court said you can’t sue for retaliation if you only report something internally at your company. You have to tell the Commission, too, or you’re not a whistleblower under the law. Sounds simple enough, except the SEC had promulgated a rule to the contrary. Here’s the Wall Street Journal’s take on it.

The case was brought by a man who said his company fired him after he reported some accounting problems up the chain.

He didn’t go to the SEC, but he did sue for retaliation, and the company moved to dismiss.

Both the trial court and the appeals court denied that motion. They ruled that even if the man wasn’t entitled to money as a whistleblower, he could sue under the anti-retaliation sections of the law if he was fired for reporting wrongdoing.

But the high court unanimously reversed, saying you can’t sue for retaliation as a whistleblower unless and until you tell the SEC. The statute that created the whistleblower program, the Dodd-Frank law, defines whistleblower as a person who provides information “to the Commission.” And that supports the law’s core purpose, which is to spur people to tell the SEC. There’s another federal law, Sarbanes-Oxley, that protects you from retaliation for reporting something internally. But that law requires you to file a complaint with the Labor Department within six months before you can sue in court. And you only get simple back pay. The Dodd-Frank law lets you sue directly in federal court within six to ten years, and you get double back pay. But only if you tell the SEC.