Regulatory and Enforcement Alert
Senate Bill Proposes to Extend Dodd-Frank Anti-Retaliation Protection
to Employees Who File Whistleblower Complaints Internally
September 27, 2019
On September 24, 2019, bipartisan members of the Senate Finance Committee introduced a bill that would extend
the Dodd-Frank Act’s anti-retaliation protections for whistleblowers to individuals who report potential securities
violations internally within their companies, even if the individual does not also report the information to theSecurities and Exchange Commission. While it is not yet clear whether the bill has traction or what any final
legislation would look like, as currently drafted, our view is that the Whistleblower Programs Improvement Act(“WPIA”) would be a positive development for the business community. It would help incentivize employees toreport suspected misconduct internally before contacting regulators, and any increased internal reporting would
give companies more opportunities to detect and promptly remediate substantiated misconduct as well as
consider self-reporting the issue to regulators.
The WPIA appears to be a direct response to the Supreme Court’s recent decision in Digital Realty Trust, Inc. v.
Paul Somers (2018), which interpreted the meaning of the term “whistleblower” in the anti-retaliation provisionof the Dodd-Frank Act’s whistleblower program. Based on the statutory definition of “whistleblower”, theSupreme Court held that only employees who report information directly to the SEC qualify as “whistleblowers”
entitled to this anti-retaliation protection. Accordingly, the Court held that employees who report information
only internally within their company, and not directly to the SEC, are not “whistleblowers” protected fromretaliation under Dodd-Frank. The WPIA would expand the definition of “whistleblower” for purposes of DoddFrank’s anti-retaliation provision to include both employees who provide relevant information to the SEC andemployees who provide information to “a person with supervisory authority over the whistleblower at theemployer of the whistleblower” or “another individual working for the employer . . . who the whistleblower
reasonably believes has the authority . . . to investigate, discover, or terminate the misconduct; or . . . to take anyother action to address the misconduct.”
As the WPIA is currently drafted, the anti-retaliation protections of Dodd-Frank would apply as long as anemployee reports information to someone in a “supervisory” position over the employee. In a perfect world, thebill would require an employee to report the suspected misconduct through formal designated reporting channels(such as an ethics hotline) or to specific senior-level individuals or specific departments (such as internal audit,compliance, or legal) that are best positioned to address the issue. At the very least, however, the WPIA stands tohelp ensure that employees are not discouraged from internal reporting, particularly employees who are simply
trying to do the right thing by speaking out but who are not interested in triggering full-blown government
Simpson Thacher & Bartlett LLP

Regulatory and Enforcement Alert – September 27, 2019

2inquiries. Ultimately, any increase in internal reporting, even if only to supervisors, would better position
companies to proactively investigate and remediate problems before the government comes knocking.
For further information about this Alert, please contact one of the following authors or your regular Simpson
Thacher contact.
NEW YORK CITY
Brooke E. Cucinella+1-212-455-3070
brooke.cucinella@stblaw.com

Paul C. Curnin+1-212-455-2519
pcurnin@stblaw.com

Stephen M. Cutler+1-212-455-2773
stephen.cutler@stblaw.com

Nicholas S. Goldin+1-212-455-3685
ngoldin@stblaw.com

Joshua A. Levine+1-212-455-7694
jlevine@stblaw.com

Michael J. Osnato, Jr.
+1-212-455-3252
michael.osnato@stblaw.com

Jonathan K. Youngwood+1-212-455-3539
jyoungwood@stblaw.com

Anthony C. Piccirillo+1-212-455-7189
anthony.piccirillo@stblaw.com

HONG KONG
Adam Goldberg+852-2514-7552
adam.goldberg@stblaw.com
PALO ALTO
Stephen P. Blake+1-650-251-5153
sblake@stblaw.com

Alexis S. Coll-Very+1-650-251-5201
acoll-very@stblaw.com

James G. Kreissman+1-650-251-5080
jkreissman@stblaw.com

Cheryl J. Scarboro+1-202-636-5529
cscarboro@stblaw.com

John Terzaken+1-202-636-5858
john.terzaken@stblaw.com

WASHINGTON, D.C.
Jeffrey H. Knox
+1-202-636-5532
jeffrey.knox@stblaw.com
Meaghan A. Kelly+1-202-636-5542
mkelly@stblaw.com

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