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California Court Follows More Expansive Take on Who Can Be an SEC Whistleblower

Posted  November 6, 2014

By Jason Enzler

A California federal district court ruled last week that a whistleblower is not required to report allegations of violations of the U.S. securities laws to the Securities and Exchange Commission (“SEC”) in order to qualify for protection under the Dodd-Frank Act.  In the case of Connolly v. Wolfgang Remkes, Case No. 5:14-CV-01344 (N.D. Cal. Oct. 28, 2014), the court made that decision — and joined other district courts in doing so — in opposition to a lone, higher court decision ruling the opposite.

In July 2013, the Fifth Circuit Court of Appeals ruled that a whistleblower must report possible wrongdoing to the SEC in order to qualify as an eligible whistleblower under the Dodd-Frank Act.  (Click here for our blog post on that ruling.)  Since the Fifth Circuit’s decision, however, district courts in other circuits have reached the opposite conclusion, ruling that a whistleblower reporting only internally could still qualify as a SEC whistleblower.

This most recent decision on the issue, the first of its kind among federal courts of the Ninth Circuit, is a notable comment on the battle over who can qualify as an eligible whistleblower under the SEC whistleblower rules.  Whether any other higher courts deem this an issue worth consideration remains unclear.

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