The SEC continues to file amicus briefs in an effort to convince federal courts that the Dodd-Frank Act protects whistleblowers from retaliation regardless of whether they provided information to the SEC before adverse action was taken against them.
The SEC filed an amicus brief in Verble v. Morgan Stanley Smith Barney, LLC, No. 15-6397, which is now on appeal at the U.S. Court of Appeals for the Sixth Circuit. The district court dismissed the plaintiff’s Dodd-Frank retaliation claim because the plaintiff provided information to the SEC only after he had been terminated and thus was not a “whistleblower” under 15 U.S.C. § 78U-6(a)(6). [See January 7, 2016, Legal News, “Tennessee Federal Court Dismisses Whistleblower Retaliation Claims and Declines to FollowBerman v. Neo@Ogilvy. The SEC’s brief in support of the whistleblower’s position did not address the particular facts of the case, but rather described the ongoing debate between the courts as articulated inAsadi v. G. E. Energy (USA), LLC, 720 F.3d 620 (5th Cir. 2013) and Berman v. Neo@Ogilvy LLC, 803 F.3d 145 (2nd Cir. 2015), noting that the Second Circuit in Berman elected to defer to the SEC’s interpretation of its whistleblower rules.
The SEC also has weighed in regarding the retaliation suit David Danon filed against Vanguard Group Inc., arguing in an amicus brief filed in the U.S. District Court for the Eastern District of Pennsylvania that Danon’s internal complaints qualified for whistleblower protection under the anti-retaliation provisions of the Dodd-Frank Act.
The Vanguard litigation has been the subject of much attention because Danon was an in-house attorney at Vanguard, who alleged in a New York state court qui tam case that Vanguard had charged artificially low prices to its related funds for investment management and administrative services to avoid paying federal and state income tax on the profits.
A judge dismissed that suit in late 2015, ruling that Danon could not proceed with his complaint because he was prohibited from disclosing Vanguard’s confidential information under New York’s attorney ethics code. In his federal lawsuit, Danon now pursues, among other things, Dodd-Frank retaliation claims.