Supreme Court Narrows Whistleblower Definition Under Dodd-Frank: Now Are Your Company’s Compliance Systems in Order?

On February 21, 2018, the U.S. Supreme Court ruled in Digital Realty Trust Inc. v. Somers that “Dodd-Frank’s anti-retaliation provision does not extend to an individual, like Somers, who has not reported a violation of the securities laws to the SEC.” The Justices unanimously agreed in the judgment of the Court, though a minority wrote concurring opinions to articulate different rationales. Although this decision narrows the definition of “whistleblower” and protects companies in certain respects, business leaders should now examine their internal compliance systems to ensure the new incentives for employees to report directly to the U.S. Securities and Exchange Commission (SEC) does not have unintended consequences for addressing and resolving potential problems.                             

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