sec cirToday, the Second Circuit issued its highly anticipated decision in Berman v. Neo@Ogilvy, ruling (in a 2-1 decision) that Dodd-Frank’s whistleblower protection provision applies to internal complaints (i.e., complaints that are made by employees within the company and not to the SEC).  This creates a circuit split; it is directly at odds with the Fifth Circuit’s 2013 decision in Asadi v. G.E. Energy (USA), L.L.C.  As a result of the clear split, the question of whether purely internal complaints are protected by Dodd-Frank could ascend to the U.S. Supreme Court for resolution.


Plaintiff-Appellant Daniel Berman (Berman) was the finance director of Defendant-Appellee Neo@Ogilvy (Company).  He was responsible for the Company’s financial reporting and compliance with GAAP, as well as internal accounting procedures of the Company and its parent.  He alleged that he discovered various practices that amounted to accounting fraud, and he reported them internally.  He claimed that a senior officer terminated his employment as a result of his whistleblowing activity.  Notably, he did not report the allegedly unlawful activity to the SEC until after his employment was terminated (and therefore cannot rely upon that report as the basis for a retaliation claim).  Berman filed suit in the Southern District of New York alleging that his employment was terminated based on his internal complaint in violation of Dodd-Frank.  The District Court dismissed his claim based on its view that Dodd-Frank provides protection only to those who claim to have been discharged as a result of reporting alleged violations to the SEC.

The Second Circuit’s Decision

In a 2-1 decision, the Second Circuit reversed the District Court’s decision, giving Chevron deference to the SEC’s interpretation that Dodd-Frank protects internal whistleblowers.  In doing so, the Second Circuit found that Dodd-Frank was ambiguous because the definition of “whistleblower” in Section 21F(a)(6) of the Exchange Act—which expressly requires a covered whistleblower to report a violation of securities laws to the SEC—was somewhat inconsistent with Section 21F(h)(1)(A)(iii)—which provides that Dodd-Frank protects individuals who make disclosures protected under SOX, as sections of SOX provide for and protect internal reporting.

The Second Circuit Majority did, however, recognize that “there is no absolute conflict” between the SEC notification requirement in the definition of “whistleblower” and the absence of such a requirement in Section 21F(h)(1)(A)(iii) because one could, as an example, simultaneously complain both to the employer and the SEC.  The court recognized that this was persuasive to the Fifth Circuit in Asadi.  But it nevertheless assumed that applying the Commission reporting requirement to employees seeking SOX remedies pursuant to subdivision (iii) would result in only “rare example[s]” of the statute’s application in this respect and “would [thus] leave that subdivision with an extremely limited scope.”  The court noted that two categories of whistleblowers, auditors and attorneys, could not report wrongdoing to the SEC until after the have reported to the employer based on statutory requirements and further postulated that “any retaliation would almost always precede Commission reporting.”

The Dissent attacked this decision from several angles.  The Dissent concluded that the Majority and the SEC altered Dodd-Frank by deleting “[report] to the Commission” from the definition of “whistleblower,” and essentially sought to expand the breadth of the statute.  The Dissent also pointedly said that the Majority engaged in a “bad misreading, tantamount to a misquotation,” in concluding that Dodd-Frank “purports to protect employees” from retaliation for making reports required or protected by SOX.  Dodd-Frank, the Dissent stressed, lists ways a “whistleblower” may engage in protected activity and—in contrast to Section 806 of SOX—it did not use the word “employee.”  The Dissent also questioned the Majority’s assumption that the Asadi court’s reading of the statute would somehow leave the statute with “extremely limited” effect and pointedly noted that, even if the majority’s questionable hypotheses in that respect happened to be true, that would still not provide any basis for concluding that the statute was “impaired or ambiguous” such that the SEC’s expansive interpretation would warrant deference.

Notably absent from the Majority’s opinion is any answer to one of the Asadi court’s primary reasons for rejecting the SEC’s expansive interpretation, i.e., that it “renders the SOX anti-retaliation provision, for practical purposes, moot.”  An interpretation of Dodd-Frank that in effect wipes out the SOX anti-retaliation provision (without Congress even hinting at any intent to do so) seems both far-fetched and unsupported.


There are several important implications of this decision.  First, it creates a clear circuit split that may ascend to the U.S. Supreme Court and may engender uncertainty in the meantime.  Second, employers can expect more federal complaints under Dodd-Frank from individuals who blow the whistle within the company but not to the SEC.  Third, whistleblowers may be more likely to invoke Dodd-Frank rather than SOX, thereby bypassing the U.S. Department of Labor’s adjudicative scheme, because Dodd-Frank offers substantially greater backpay and a much longer statute of limitations than SOX.  This third implication underscores the risk that this decision effectively eviscerates the SOX whistleblower protection provision.

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Photo of Steven J. Pearlman Steven J. Pearlman

Steven J. Pearlman is a partner in the Labor & Employment Law Department and Co-Head of the Whistleblowing & Retaliation Group and the Restrictive Covenants, Trade Secrets & Unfair Competition Group.

Steven’s practice covers the full spectrum of employment law, with a particular…

Steven J. Pearlman is a partner in the Labor & Employment Law Department and Co-Head of the Whistleblowing & Retaliation Group and the Restrictive Covenants, Trade Secrets & Unfair Competition Group.

Steven’s practice covers the full spectrum of employment law, with a particular focus on defending companies against claims of employment discrimination, retaliation and harassment; whistleblower retaliation; restrictive covenant violations; theft of trade secrets; and wage-and-hour violations. He has successfully tried cases in multiple jurisdictions, and defended one of the largest Illinois-only class actions in the history of the U.S. District Court for the Northern District of Illinois. He also secured one of only a few ex parte seizures orders that have been issued under the Defend Trade Secrets Act, and obtained a world-wide injunction in federal litigation against a high-level executive who jumped ship to a competitor.

Reporting to boards of directors, their audit committees, CEOs and in-house counsel, Steven conducts sensitive investigations and has testified in federal court. His investigations have involved complaints of sexual harassment involving C-suite officers; systemic violations of employment laws and company policies; and fraud, compliance failures and unethical conduct.

Steven was recognized as Lawyer of the Year for Chicago Labor & Employment Litigation in the 2023 edition of The Best Lawyers in America. He is a Fellow of the College of Labor and Employment Lawyers.  Chambers describes Steven as an “outstanding lawyer” who is “very sharp and very responsive,” a “strong advocate,” and an “expert in his field.” Steven was 1 of 12 individuals selected by Compliance Week as a “Top Mind.” Earlier in his career, he was 1 of 5 U.S. lawyers selected by Law360 as a “Rising Star Under 40” in the area of employment law and 1 of “40 Illinois Attorneys Under Forty to Watch” selected by Law Bulletin Publishing Company. Steven is a Burton Award Winner (U.S. Library of Congress) for “Distinguished Legal Writing.”

Steven has served on Law360’s Employment Editorial Advisory Board and is a Contributor to He has appeared on Bloomberg News (television and radio) and Yahoo! Finance, and is regularly quoted in leading publications such as The Wall Street Journal.

The U.S. Chamber of Commerce has engaged Steven to serve as lead counsel on amicus briefs to the U.S. Supreme Court and federal circuit courts of appeal. He was appointed to serve as a Special Assistant Attorney General for the State of Illinois in employment litigation matters. He has presented with the Solicitor of the DOL, the Acting Chair of the EEOC, an EEOC Commissioner, Legal Counsel to the EEOC and heads of the SEC, CFTC and OSHA whistleblower programs. He is also a member of the Sedona Conference, focusing on trade secret matters.

Photo of Lloyd B. Chinn Lloyd B. Chinn

Lloyd B. Chinn is a partner in the Labor & Employment Law Department and co-head of the Whistleblowing & Retaliation Group. He litigates employment disputes of all types before federal and state courts, arbitration tribunals (e.g., FINRA, JAMS and AAA), and before administrative…

Lloyd B. Chinn is a partner in the Labor & Employment Law Department and co-head of the Whistleblowing & Retaliation Group. He litigates employment disputes of all types before federal and state courts, arbitration tribunals (e.g., FINRA, JAMS and AAA), and before administrative agencies in New York and across the country. Lloyd’s practice ranges from litigating compensation disputes to defending whistleblower, discrimination and sexual harassment claims. Although he represents employers in a wide range of industries, including law, insurance, health care, consulting, media, education and technology, he focuses a substantial portion of his practice on the financial services sector. He has tried to final verdict or arbitration award substantial disputes in this area.

Due to Lloyd’s litigation experience, clients regularly turn to him for advice regarding the full range of employment matters, including terminations, whistleblower policy and procedure, reductions in force, employment agreements, and employment policies. For example, in the wake of the financial crisis, he has counseled a number of firms through reductions in force and related bonus and deferred compensation disputes. Lloyd has also been retained to conduct internal investigations of allegations of workplace misconduct, including claims leveled against senior executives.

Lloyd has represented global businesses in matters involving Sarbanes-Oxley and Dodd-Frank whistleblower claims. He has taken an active role in the American Bar Association on these issues, currently serving as Co-Chair of the Whistleblower subcommittee of the ABA Employee Rights and Responsibilities Committee. Lloyd has spoken on whistleblowing topics before a numerous organizations, including the American Bar Association, ALI-ABA, Association of the Bar of the City of New York, and New York University School of Law. He has testified twice before Congressional subcommittees regarding whistleblower legislation and has also published blog postings, articles and client alerts on a variety of topics in this area, including the Dodd-Frank Act’s whistleblower provisions. Lloyd is a co-editor of Proskauer’s Whistleblower Defense Blog, and he has been widely quoted by on whistleblower topics by a number of publications, including the New York Times, the Wall Street Journal, the National Law Journal and Law 360.

Lloyd has also become active in the International Bar Association, presenting on a variety of subjects, including: the #MeToo movement, the COVID-19 pandemic and employment law, and cross-border harmonization of employment provisions in transactions. Lloyd also hosts a quarterly roundtable discussion among financial services industry in-house employment lawyers. He has also published articles and given speeches on a variety of other employment-law topics, including non-solicitation provisions, FINRA arbitration rules, cross-border discovery, e-discovery, and the use of experts.