On December 5, 2014, the Southern District of New York in Berman v. Neo@Ogilvy, No. 14-cv-523, ruled that an employee who complains internally about securities law violations does not qualify as a “whistleblower” under the Dodd-Frank whistleblower protection provision because that statute only protects individuals who report to the SEC.  The court followed the Fifth Circuit and diverged from prior decisions from the same district.


Plaintiff alleged that he internally reported a number of transactions he believed to be unlawful, including violations of SOX and Dodd-Frank.  Shortly thereafter, his employment was terminated and, significantly, the termination occurred before he made any complaints to the SEC.

Plaintiff filed suit under the Dodd-Frank anti-retaliation provision.  Defendants moved to dismiss, arguing that he was not a “whistleblower,” as defined in Dodd-Frank, because the statute defines “whistleblower” as an individual who provides information relating to a violation of the securities law “to the Commission.”  Plaintiff, however, contended that the statute is ambiguous and argued that the court should defer to the SEC’s expansive interpretation of “whistleblower,” which includes employees who report internally.

The court noted that despite the “clear statutory language,” a number of district courts, including courts within the Southern District of New York, have carved out a “narrow exception” to Dodd-Frank’s definition of a whistleblower and deferred to the SEC’s broad interpretation.  The court, however, concluded that such decisions are unpersuasive, and it adopted the rationale espoused by the Fifth Circuit in Asadi—the only circuit court decision to address the definition of “whistleblower” under Dodd Frank.  The court reasoned that the Fifth Circuit’s decision, which rested on “fundamental principles of statutory construction,” identified a “harmonious interpretation of the statute that eliminates the purported contradiction in the Act that forms the basis of the other district court’s determination that the statute is ambiguous.”  The court further noted that “it appears to be the exception, not the rule, for Congress to grant an individual a private right of action to sue for damages arising from retaliation without requiring that individual to make contact with a federal agency first.”  Accordingly, the court granted Defendants’ motion to dismiss, stressing that “because the language of the statute unambiguously requires that the person provide information to the Commission in order to qualify as a whistleblower under the Act … plaintiff is not a whistleblower.”


The definition of a Dodd Frank “whistleblower” continues to be hotly contested in district courts outside of the Fifth Circuit.  In fact, the Berman decision shows that judges within the Southern District of New York disagree as to whether internal complaints are protected under Dodd-Frank.  As district courts continue to issue divergent decisions, we can expect more appellate courts to eventually address this issue.  As noted in our recent post, it is possible that the Third Circuit may address this issue soon in response to the SEC’s recent amicus brief.