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Supreme Court Rules that Dodd-Frank Does Not Apply to Whistleblowers Who Fail to Report to the Securities and Exchange Commission

On February 21, 2018, the United States Supreme Court issued a unanimous decision in Digital Realty Trust, Inc. v. Somers, holding that the anti-retaliation provisions in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 do not protect individuals who report suspected securities law violations to company management, but not to the Securities and Exchange Commission. 

The Court’s decision hinged on the textual definition of “whistleblower” set forth in Dodd-Frank.  In particular, the Court held that because the applicable statutory provision defines “whistleblower” as an individual who provides information “to the Commission”, the statute is clear and conclusive.  Thus, although the Court invalidated an SEC regulation which had extended Dodd-Frank’s anti-retaliation protections to individuals reporting potential securities-laws violations to company management only, and not to the SEC, the Court did not revisit the so-called Chevron doctrine, which demands judicial deference to the judgment of federal agencies charged with administering a particular statute.

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