Stay current on changes and developments in corporate law with a wide variety of resources and tools.
Oct. 29 — A securities firm employee who allegedly was constructively discharged after refusing to cover up a securities law violation stated a claim under the Dodd-Frank Act's whistle-blower anti-retaliation provisions, the U.S. District Court for the Northern District of California concluded Oct. 28.
Adopting the “majority view,” Judge Lucy Koh said plaintiff Karen Connolly is covered by the statute, even though she didn't first report her concerns to the Securities and Exchange Commission.
The court also concluded that Connolly's claims under the Sarbanes-Oxley Act weren't filed within the applicable limitations period. However, it said the plaintiff may seek to amend her complaint to show equitable tolling.
The court recounted that Connolly resigned from defendant WHJR Associates in December 2012 after allegedly refusing to engage in a cover-up of Financial Industry Regulatory Authority rule violations involving customer accounts. In March 2014, she sued her former employers, claiming she was constructively discharged in violation of SOX and Dodd-Frank Wall Street Reform and Consumer Protection Act whistle-blower anti-retaliation protections, among other causes of action.
The defendants moved to dismiss, saying Connolly wasn't entitled to whistle-blower protection. Specifically, the court said, the defendants claimed Connolly wasn't protected under Dodd-Frank because she didn't report the alleged violations to the SEC. As to Connolly's SOX claim, they argued that the lawsuit was untimely, WHJR isn't a public company within the scope of the statute, and Connolly didn't engage in any protected activity.
The court said the defendants acknowledge that there is a split of authority as to whether a Dodd-Frank whistle-blower must report directly to the SEC. It also noted the SEC's position that direct reporting is not required.
The court concluded that the SEC's interpretation of the statute “is a reasonable one that warrants deference” and allowed Connolly's Dodd-Frank claim to proceed.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)