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Supreme Court Poised to Eviscerate Internal Reporting

WASHINGTON, DISTRICT OF COLUMBIA, UNITED STATES, November 28, 2017 / -- Rejecting arguments by Senator Charles Grassley, the Securities and Exchange Commission (“SEC”) and numerous representatives from the whistleblower community, during today’s oral argument in Digital Realty Trust v. Somers (No. 16-1276), the U.S. Supreme Court Justices expressed support for stripping internal whistleblowers of protection under the Dodd-Frank Act (“DFA”).

“Any employee who is considering raising a fraud complaint must file a claim with the SEC before they alert their management to the issues,” said Stephen M. Kohn, leading whistleblower attorney and executive director of the National Whistleblower Center.

At oral argument the justices expressed skepticism regarding the need to ensure that employees who report fraud concerns to audit committees and other mandatory internal procedures are protected under the DFA. Instead, through their questioning and comments, the Justices gave a green light for every employee to file fraud complaints directly to SEC and circumvent internal reporting procedures.

“We fear that many employees will lose valuable rights because they follow common sense internal reporting requirements. But the comments of the Justices during oral argument unequivocally warn all corporate employees that to be protected under DFA they must file with SEC,” Kohn stated.

Mary Jane Wilmoth
National Whistleblower Center
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