A recent decision by the Second Circuit Court of Appeals in New York has staged a showdown for the Supreme Court to decide what protections whistleblowers should receive when they report illegal activity internally and an employer retaliates as a result. However the Supreme Court decides, corporate officers should take a deep breath and think about the impact of the positions they are taking on the issue.
The landmark Dodd-Frank Act gives special protections to corporate employees who expose securities law violations. If an employer retaliates, the employee can sue for double damages and has a longer statute of limitations than under other laws (such as Sarbanes-Oxley). Dodd-Frank also allows the employee to sue immediately in federal court, without the need first to go through lengthy and often pointless administrative proceedings.
The suit in question, Berman v. Neo@Ogilvy, was brought by Daniel Berman, a financial director at a major advertising firm, after he was allegedly fired for reporting accounting fraud internally. Berman then reported his findings to the Securities and Exchange Commission (SEC) six months later. The Berman court addressed the question of who is eligible for this expanded whistleblower protection — whether the law protects an employee who merely reports illegal conduct internally, or only those employees who report to the SEC.
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