Under recently implemented provisions of the Dodd-Frank Act, whistle-blowers who report violations of securities laws are supposed to be protected from being fired. These protections – which can include reinstatement, double back pay and special damages – are designed to serve as an incentive for individuals to come forward despite the significant risk that they will be retaliated against by their company for exposing the wrongdoing. However, due to two recent and conflicting court decisions on the subject, there remains a very open question on exactly who is covered by these whistle-blower protections.

Both cases dealt with whistle-blowers who reported violations of the Foreign Corrupt Practices Act (FCPA), the statute that makes it illegal for U.S. companies to bribe officials in foreign countries to secure business there. In both cases, the whistle-blowers only reported the alleged violations internally to their supervisors within their respective companies. They did not report them to the Securities and Exchange Commission. And, in both cases, the whistle-blowers were fired for coming forward.  So the question before the two courts was whether these whistle-blowers were entitled to invoke the whistle-blower protections under Dodd-Frank even though they never reported the alleged wrongdoing to the government.

For the full BankThink piece see "Dodd-Frank Provisions Cause Whistle-Blower Dilemma"