Signed into law in 2010, the Dodd-Frank Act provides protections to employees who blow the whistle on potential regulatory violations in the financial services industry. Provisions in the law protect whistleblowers from retaliation by their employers. However, a recent U.S. appellate court ruling raises the question of whether certain foreign employees of multinational corporations are afforded those same protections.
The case involved Siemens China and a former Taiwanese employee who brought a retaliation claim under Dodd-Frank. The employee claimed that he was fired after he reported potentially improper payments. Siemens said the man’s retaliation claim was baseless, and that his employment was terminated for performance reasons. The panel of three appellate court judges upheld a lower court’s decision to let Siemens dismiss the retaliation claim. The appellate court referred to a 2010 decision by the U.S. Supreme Court, saying that U.S. law does not apply abroad unless it can be shown that Congress intended such application. Referring to the Siemens case, the appellate court had this to say: “The whistleblower, his employer, and the other entities involved in the alleged wrongdoing are all foreigners based abroad, and the whistleblowing, the alleged corrupt activity, and the retaliation all occurred abroad.” However, foreign employees could still be protected under Dodd-Frank if they were retaliated against by U.S.-based supervisors.
The court’s ruling could have major repercussions, given that in fiscal year 2013, whistleblowers from 55 foreign countries reported potential violations to the Securities and Exchange Commission. Of those tipsters who participated in the SEC’s bounty program, 12 percent reported from foreign countries.
If you are involved in a legal dispute involving the Dodd-Frank Act, the federal False Claims Act, the Sarbanes-Oxley Act or any other regulatory reform, then it is important to have a full-service legal team on your side to guide you toward a resolution. Our business litigation website has more on these matters.
Source: The Wall Street Journal, “Ruling Leaves Cloud on Whistleblowers,” Rachel Louise Ensign, Aug. 18, 2014