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Thomas A. Sporkin quoted in Law.com article, “US Supreme Court Weighs In on Whistleblower Protections Within Dodd-Frank”

Law.com

Thomas A. Sporkin

Thomas A. Sporkin was quoted on April 12, 2018 in a Law.com, “US Supreme Court Weighs In on Whistleblower Protections Within Dodd-Frank,” which discussed a whistleblower case involving Digital Realty Trust, Inc., a San Francisco-based REIT, which terminated Paul Somers, vice president, portfolio management, Asia-Pacific and Europe. The article stated,  “Somers claimed that just before he was terminated, he had reported internally several times that his supervisor apparently eliminated certain internal controls mandated by the Sarbanes-Oxley Act of 2002, and concealed approximately $7 million in cost overruns. However, Somers never alerted the SEC to the suspected securities law violations. Instead, circa seven months later, Somers filed suit against Digital Realty Trust, seeking protection under the Dodd-Frank Act. Digital Reality moved to dismiss the claim on the ground that Somers was technically not a whistleblower, because he did not alert the SEC to the suspected violations prior to his termination.” The case eventually made its way to the U.S. Supreme Court, and on February 21, 2018, the Court held that “the anti-retaliation provisions of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act do not extend to employees who have reported internally but extend only to employees who have reported suspected securities law violations to the Securities and Exchange Commission, which reversed the U.S. Court of Appeals for the Ninth Circuit decision.”

In discussing the decision, Sporkin noted, “This may be a hollow victory for corporate America. To qualify as a ‘whistleblower’ under Dodd-Frank, individuals now have a clear incentive to report all sorts of observations to the SEC before reporting those observations through their company’s internal reporting infrastructure. While approximately 80 percent of the whistleblowers who received awards in 2016 reported internally before reporting to the Commission, that trend is likely to be reversed.”

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