Wall Street went through a legislative overhaul back in 210 when President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act on July 21st. One of the main goals of the Act was to encourage insiders to assist the government in the prosecution of those who have violated securities laws and also to expand protection for whistleblowers from retaliatory actions. Prohibitions on whistleblower retaliation were greatly increased by the Act.
What Does the Dodd-Frank Act Prohibit?
Section 922 of the Act specifically amends the Securities Exchange Act so that there is a general prohibition on employers discriminating against an employee who:
- Provides information to the SEC;
- Assists in certain investigations or initiates testifying in actions related to information provided to the SEC; or
- Discloses information that are either required or protected under the Sarbanes-Oxley Act, the Securities Exchange Act or other applicable law subject to SEC jurisdiction.
In fact, the Act not only prohibits discrimination against an employee who engages in such actions, but it provides employees with a private right of action under the Securities Exchange Act if a whistleblower has been retaliated against by an employer. Such a private right of action may be brought up either three years after the date when the material facts are known or reasonably should have been known by the employee or six years after the retaliation occurred, whichever is the earliest of the two. These claims can be brought directly in federal court, circumventing the Sarbanes-Oxley Act requirements to exhaust DOL administrative remedies prior to going to court.
If a claimant prevails on such a claim, he or she may be entitled to be reinstated in a job, receive double back pay with interests, and receive reimbursement for costs incurred due to litigation, including attorneys’ fees and costs. Available remedies under this private right of action differ from those offered under Section 608 of the Sarbanes-Oxley Act. Under the Sarbanes-Oxley Act, reinstatement and back pay may be available, but double back pay is not.
Additional prohibitions instituted by the Dodd-Frank Act include a prohibition on retaliation against an employee who has engaged in protected acts including:
- Providing an employer, the Bureau of Consumer Financial Protection, a state, local or federal government authority, or law enforcement agency with information pertaining to violations of the law subject to the bureau’s jurisdiction;
- Testifying in or initiating a proceeding under a federal consumer financial law; or
- Objecting to or refusing to participate in an activity that a financial services employee has a reasonable belief that the activity is in violation of a law subject to the Bureau’s jurisdiction.
These prohibitions are included in Section 1057 of the act. This section also creates a private right of action for employees who have been subjected to retaliation for engaging in the above-protected activities. Organizations covered by 1057 of the act include those which provide real estate settlement services, those that perform property appraisals, and those that extend credit or service loans as well as those entities that provide financial advisory services. Remedies under this private right of action include reinstatement and back pay as well as compensatory damages, attorneys fees, and reimbursement for the costs associated with litigation.
Employment Law Attorneys
Legislation such as the Dodd-Frank Act provides critical protections for employees. For more information on this Act and other critical pieces of employment legislation, talk to the knowledgeable team at Castronovo & McKinney. We are here to help. Contact us today.