Contact us with your California corporate & securities law questions (949) 353-6347 or Contact us here

Exactly What Part Of "To The Commission" Is Ambiguous?

The Dodd-Frank Act gave us many things, including Section 21F of the Securities Exchange Act of 1934.  Section 21F, prohibits employers from retaliating against a "whistleblower".  15 U.S.C. § 78u-6(h)(1)(A).  We need not guess about the definition of "whistleblower" because Congress conveniently provided the following definition:

. . . any individual who provides, or 2 or more individuals acting jointly who provide, information relating to a violation of the securities laws to the [Securities and Exchange] Commission, in a manner established, by rule or regulation, by the Commission.

15 U.S.C. §78u-6(a)(6) (emphasis added).  Remarkably, the SEC ignored Congress' definition and adopted a rule that extends whistleblower protection to persons who do not provide information to the SEC.  17 C.F.R. § 240.21F-2.  The Fifth Circuit Court of Appeals rejected the SEC's "expansive interpretation of the term ‘whistleblower’ for purposes of the whistleblower-protection provision". Asadi v. G.E. Energy United States, L.L.C., 720 F.3d 620, 630 (5th Cir. 2013).  A split in the circuit courts later arose when the Second Circuit deferred to the SEC's interpretation in Berman v. Neo@Ogilvy LLC, 2015 U.S. App. LEXIS 16071 (2d Cir. Sept. 10, 2015).

As I discussed in this post from September 2015, an intra-circuit split developed here in the Ninth Circuit.  Yesterday, that split was resolved when the Ninth Circuit followed the Second Circuit's approach.  Somers v. Digital Realty Trust, 2017 U.S. App. LEXIS 4079 (9th Cir. 2017).  Judge John B. Owens' dissent is succinct and to the point:

I agree with the Fifth Circuit in Asadi v. G.E. Energy (USA), L.L.C., 720 F.3d 620, 621 (5th Cir. 2013), and Judge Jacobs' dissent in Berman v. Neo@Ogilvy LLC, 801 F.3d 145, 155-60 (2d Cir. 2015), and therefore respectfully dissent. Both the majority here and the Second Circuit in Berman rely in part on King v. Burwell, 135 S. Ct. 2480 (2015), to read the relevant statutes in favor of the government's position. In my view, we should quarantine King and its potentially dangerous shapeshifting nature to the specific facts of that case to avoid jurisprudential disruption on a cellular level. Cf. John Carpenter's The Thing (Universal Pictures 1982).

 

 

Share on:

Rule 21F-2, Section 21F, Somers v. Digital Realty Trust, Dodd-Frank Act, SEC, Securities and Exchange Commission, whistleblower, Whistleblowers

ANY QUESTIONS REGARDING CALIFORNIA CORPORATE AND SECURITIES LAW? CONTACT US DIRECTLY

We offer expert advice with the intricacies of California law.

Our years of experience and expertise allow us to help clients navigate the business laws in California.

CONTACT US

Get the latest news and analysis about California Corporate & Securities law. Subscribe to our newsletter today!

We respect your email privacy

ABOUT OUR AUTHOR

30172DBAB0084D3A8F39D7AF0A8E79BC.ashx Keith Paul Bishop
Partner at Allen Matkins
(949) 353-6328
 Contact me
Learn More About Keith

nominee-badge

Get the latest news and analysis about California Corporate & Securities law. Subscribe to our newsletter today!

We respect your email privacy

CATEGORIES

see all

RECOGNITION

YOUTUBE

FACEBOOK