SEC Files Amicus In Bid To Protect Employees Who Report Internally

On December 11, 2014, the U.S. Securities and Exchange Commission (SEC) filed an amicus brief with the Third Circuit Court of Appeals in support of a whistleblower in the case of Mikael Safarian v. American DG Energy Inc. The SEC asked the Court to uphold the agency’s expansive view of who is protected from retaliation under its whistleblower program, saying that even those who don’t report wrongdoing to the SEC but who instead make internal reports to the company should still be covered by its rules.

The whistleblower, Mikael Safarian, is appealing a lower court dismissal of his Dodd-Frank whistleblower claim. The SEC’s brief urges the Court to reinstate Safarian’s whistleblower case and endorse the agency’s definition of “whistleblower” as including individuals who only report internally.

If the Third Circuit agrees with the SEC and determines that internal reporting is protected activity under Dodd-Frank, it would create a split in the circuits on the scope of Dodd-Frank. Recently the Fifth Circuit declined to defer to the SEC’s regulations and held in Asadi v. G.E. Energy (USA), LLC that the whistleblower protection provision of Dodd-Frank was unambiguous that to qualify as whistleblower individuals must report information relating to a violation of the securities laws to the SEC.