On Wednesday, February 21, 2018, the US Supreme Court resolved a circuit split by unanimously holding that an employee must report suspected securities law violations to the SEC in order to qualify as a whistleblower entitled to protection from retaliation under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank”). Dodd Frank’s anti-retaliation protections do not extend to employees who only report such concerns internally to their employer.
In 2010, Congress passed Dodd-Frank, which, among other things: (1) provides for the payment of monetary awards to whistleblowers under certain circumstances whose tips to the SEC lead to the SEC’s recovery of more than US$1 million; and (2) prohibits employers from retaliating against whistleblowers who provide information to the SEC, participate in SEC investigations or actions, or make disclosures that are required or protected by other securities laws, including the Sarbanes-Oxley Act of 2002. Dodd-Frank included a directive to the SEC to promulgate rules implementing the whistleblower provisions of the statute. Although the statute explicitly defined a whistleblower as “any individual who provides . . . information relating to a violation of the securities laws to the Commission,” the SEC nevertheless passed Rule 21F-2, which said that Dodd-Frank’s definition of a whistleblower only applied to the monetary award portion of the statute, and that it was inapplicable to the anti-retaliation portion of the statute. In subsequent litigation about whether employees who reported concerns internally but not to the SEC were covered by Dodd-Frank’s anti-retaliation provisions, a circuit split ensued, with some courts affording so-called Chevron deference—determining first if a statute is ambiguous, and if so, deferring to the interpretation of the agency entrusted with the statute's administration—to the SEC’s interpretation of the Dodd-Frank whistleblower provisions.[3 The Supreme Court resolved this split of authority in Digital Realty Trust v. Somers.
In Digital Realty, the plaintiff, Paul Somers, alleged that Digital Realty terminated him shortly after he informed senior management of suspected securities law violations. Somers, who never reported his concerns to the SEC, sued the company for violating Dodd-Frank’s anti-retaliation provision. Digital Realty moved to dismiss the claim, arguing that Somers did not qualify as a “whistleblower” under Dodd-Frank because he did not report any alleged violations to the SEC. The Northern District of California denied the motion, finding the statutory scheme ambiguous, and therefore deferring to the SEC’s Rule 21F-2, which does not require a report to the SEC. The Ninth Circuit affirmed. The Supreme Court reversed because the statute’s definition of the term “whistleblower” clearly contained an SEC reporting requirement. Importantly, the Supreme Court declined to provide Chevron deference to the SEC’s rulemaking on the issue, explaining that “[w]hen a statute includes an explicit definition, [the Supreme Court] must follow that definition.” In short, the Court concluded that because the Dodd-Frank’s anti-retaliation provision was unambiguous in its definition of whistleblower, Chevron deference to the SEC’s contrary view adopting a more expansive interpretation of the statute was not warranted.
While individuals who fail to report potential securities law violations to the SEC are not protected by Dodd-Frank’s anti-retaliation provision, those individuals are still protected under the Sarbanes-Oxley Act. The Sarbanes-Oxley Act, however, requires individuals to first file a complaint with the Secretary of Labor before proceeding to court, and recoveries are limited to actual backpay with interest (whereas Dodd-Frank provides for double backpay). Further, the SEC itself is not empowered to bring retaliation claims under the Sarbanes-Oxley Act—the claim must be brought by the individual who purportedly suffered the retaliation. The SEC is empowered to bring retaliation claims and seek statutory penalties under Dodd-Frank. The Supreme Court’s ruling in Digital Realty now restricts the SEC’s ability to sanction companies for improper retaliation to those situations where the individual actually reported information to the SEC.
 15 U.S.C. § 78u-6(h)(1)(A)(i)–(iii) (2016).
 15 U.S.C. § 78u-6(a)(6) (emphasis added).
 Compare Berman v. Neo@Ogilvy LLC, 801 F.3d 145, 155 (2d Cir. 2015) (holding that Dodd-Frank prohibits retaliation for both internal reporting and disclosure to the SEC), with Asadi v. G.E. Energy (USA), L.L.C., 720 F.3d 620, 629 (5th Cir. 2013) (holding that Dodd-Frank prohibits retaliation only for disclosure to the SEC). Norton Rose Fulbright represented the defendant in Asadi.
 No. 16-1276 (Supreme Court of the United States February 21, 2018).
 Id. at 7.
 Id. at 8.
 Id. at 9 (citing Burgess v. United States, 553 U.S. 124, 130 (2008)).