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June 22, 2022

Exposing unlawful conduct by a business often creates significant monetary exposure for that company and any individual employees engaged in wrongdoing. While the U.S. Securities and Exchange Commission is focused on preserving the confidentiality of whistleblowers’ identities, individuals who step forward to report securities fraud may still face retaliation for their decision to do so. Indeed, companies may take adverse actions against employees who they know to be whistleblowers—because they reported internally—or who they suspect to have gone to the Government.

Fortunately, though, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 specifically prohibits this kind of retaliatory activity and provides compensation for those who are subjected to it. Employers are barred from discharging, demoting, suspending, harassing, threatening, or otherwise discriminating against whistleblowers for reporting fraud to the SEC. Employees who suffer such discrimination are afforded a private right of action through which they may seek reinstatement, two times their back pay, and attorneys’ fees and costs. The anti-retaliation protections are enforced by individuals bringing such lawsuits or through enforcement actions filed by the SEC.

It is important to note, however, that the anti-retaliation provisions of the Dodd-Frank Act attach only upon a whistleblower’s reporting to the SEC. A recent opinion issued in 2018 by the United States Supreme Court in Digital Realty Trust v. Somers held that the plain text of the Dodd-Frank Act rendered internal reporting insufficient to trigger the statute’s anti-retaliation protections. Thus, to be eligible for reinstatement, two times back pay, and attorneys’ fees and costs, the retaliation suffered by a SEC whistleblower must come after that person has reported violations of the federal securities laws to the agency.

However, where an individual has yet to report the fraud to the SEC before suffering retaliation, that person may still be eligible for overlapping anti-retaliation provisions provided by the Sarbanes-Oxley (SOX) Act of 2002—which protects whistleblowing relating to violations of federal rules or laws pertaining to securities or shareholder fraud. SOX extends its reach to whistleblowers who have only reported internally; applies to any publicly traded company, certain affiliates, and any of its officers, employees, contractors, subcontractors, or agents (the Dodd-Frank Act applies only to employers); and allows for special damages for emotional distress and reputational harm (the Dodd-Frank Act does not). But SOX also requires an individual to initially file with the Occupational Safety and Health Administration (OSHA), affords a relatively short 180-day statute of limitations, and provides only ordinary back pay—not double back pay as the Dodd-Frank Act does.

The retaliation damages made available by the Dodd-Frank Act, and SOX, supplement the potential for substantial rewards offered under the SEC Whistleblower Program. The prospect of receiving a whistleblower reward provides a critical incentive to potential whistleblowers undertaking the risks to their career that come with reporting fraud. And the protections afforded by the Dodd-Frank Act’s and SOX’s anti-retaliation provisions provide individuals with additional comfort and security in bringing such fraud to light. It is crucial that we make whistleblowers whole and assure that they are compensated for their courage in reporting misdoing. Without the information and insights they provide, many schemes would go undetected and substantial securities fraud would remain undiscovered.

If you are considering reporting information to the SEC, please fill out our online form or contact us by phone at (267) 551-5240 or via e-mail at for a free, confidential consultation.


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