By: Maximilian Raileanu
Congress passed the Wall Street Reform and Consumer Protection Act (“Act”) in 2010 to improve accountability within the U.S. financial system and to protect consumers from corrupt business practices.  The passage of the Act was in response to the 2008 financial crisis and the widespread mentality of “too big to fail”. The Act protects employees, known as “whistleblowers”, who notify the Securities Exchange Commission (“SEC”) of business practices that fall within the Act from retaliation from their employers. Each whistleblower is specifically protected from discharge, demotion, suspension, threats, harassment, directly or indirectly from reporting corruption within their company. This Act has played a large role in improving accountability within the U.S. financial market because employees knew they would be protected for doing the right thing. The recent United States Supreme Court decision in Digital Realty Trust, Inc. v. Somers may change this.
The respondent, Paul Somers, was an executive at Digital Realty Trust, Inc. when he suspected one of his bosses of hiding millions of dollars in overruns and corruptly granting financial favors. He subsequently reported his accusations to senior managers and was fired. The Supreme Court ruled that Dodd-Frank Act protections do not extend to employees who blow the whistle on corporations without notifying the SEC. The Court reasoned that because the definition of whistleblower is clear, a person “who provides information relating to a violation of the securities laws to the Commission”, it cannot apply to an employee who only reports a violation to his or her superiors. Therefore, Mr. Somers was afforded no protection under the Dodd-Frank Act.
The ripple effects of this decision will be substantial, and accountability within the U.S. financial system will likely decrease. In an annual report to Congress that detailed the progress of the Whistleblower Program, the SEC revealed that it had filed amicus briefs in fourteen different internal whistleblower cases (this number is not the total), urging the courts to apply the Act to internal reporting. This demonstrates how internal whistleblowing is a crucial aspect of holding companies accountable, and how it can lead to millions of dollars in fines to help keep companies on the right path. For example, SandRidge Energy Inc. was an oil and gas company based in Oklahoma that incurred a $1.4 million penalty for retaliating against an internal whistleblower. The SEC was able to protect the employee because of the Act. However, under the Supreme Court’s ruling in Somers, the SEC may no longer do this.
At this point you might be asking, why don’t the employees just pick up the phone and call the SEC instead of just telling their bosses of possible corrupt practices? This is because it may not be that easy. Some companies are proactive in impeding their employees’ abilities to communicate with the SEC. For instance, NeuStar Inc. was fined $180,000 for hindering former employees from speaking with the SEC. Commission Rule 21F-17(a) prohibits any person from restricting another person’s ability to speak with the SEC. While this rule may exist, it does not stop companies from attempting to do so, as revealed by Neustar. Without the protections from the Act, internal whistleblowers might not want to report corruption within their company. Additionally, if employees know they will not be protected for internally reporting and their company is actively trying to restrict their communication with the SEC, the average employee might not want to go through the trouble of reporting the 21F-17(a) violation, on top of possible corrupt businesses practices.
Therefore, the Supreme Court’s holding in Somers will likely have a negative impact on the number of employees willing to blow the whistle on corruption.
 Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, 124 Stat. 1376, 1376 (2010).
 Id. at 1845.
 Dig. Realty Tr., Inc. v. Somers, No. 16-1276, 2018 WL 987345 (U.S. Feb. 21, 2018)
 Supreme Court Narrows Protections for Whistleblowers, Guardian (Feb. 21, 2018, 2:21 P.M.), https://www.theguardian.com/law/2018/feb/21/whistleblowing-supreme-court-decision-protections.
 Dig. Realty Tr., Inc. v. Somers, No. 16-1276, 2018 WL 987345 (U.S. Feb. 21, 2018).
Annual Report to Congress Regarding Whistleblower Program, SEC 21 (2017). https://www.sec.gov/files/sec-2017-annual-report-whistleblower-program.pdf.
 Richard Cassin, SandRidge Energy Penalized $2.4 Million for Firing and Impeding Whistleblower, The FCPA Blog (Dec. 27, 2016, 7:28 A.M.), https://www.fcpablog.com/blog/2016/12/27/sandridge-energy-penalized-14-million-for-firing-and-impedin.html.
 Id. (describing a situation where a company used severance agreements to restrict its former employees from speaking with the SEC).
 Protections Against Retaliation, SEC: Office of the Whistleblower, https://www.sec.gov/whistleblower/retaliation (last visited Feb. 24, 2018).