On August 4, 2015, the Securities and Exchange Commission (SEC) issued interpretive guidance clarifying that, for purposes of the employment retaliation protections under Section 21F of the Securities Exchange Act of 1934 (Exchange Act), whistleblower status:

On May 25, 2011, the SEC adopted final rules (May 25 final rules) implementing the Dodd-Frank Act whistleblower program. Section 922 of the Dodd-Frank Act added new Section 21F to the Exchange Act, entitled "Securities Whistleblower Incentives and Protection." New Section 21F requires the SEC to pay awards to individuals who voluntarily provide original information about violations of the federal securities laws that leads to successful enforcement actions where the SEC recovers monetary sanctions. The final rules implemented the provisions and procedures of this new whistleblower program. For more information, see Legal Update, SEC Issues Final Whistleblower Rules under the Dodd-Frank Act and Practice Note, Whistleblower Protections under Sarbanes-Oxley and the Dodd-Frank Act.

When it released the May 25 final rules, the SEC recognized that Section 21F is ambiguous as to the scope of its employment retaliation provisions. The SEC is now issuing interpretive guidance to clarify the meaning and application of the May 25 final rules. Specifically, the guidance states that, under Section 21F's employment retaliation protections for whistleblowers, an individual's status as a whistleblower eligible to qualify for Section 21F's employment retaliation protections is determined solely by the terms of Exchange Act Rule 21F-2(b)(1) and does not depend on adherence to the reporting procedures specified in Exchange Act Rule 21F-9(a):

This guidance is meant to refute the interpretation by the Court of Appeals for the Fifth Circuit in Asadi v. G.E. Energy (USA), L.L.C (see Legal Update, Dodd-Frank Whistleblower Provision Protects Only Those Who Report Misconduct to SEC: Fifth Circuit).

Under the SEC's interpretative guidance, an individual who reports internally and suffers employment retaliation will be no less protected than an individual who reports immediately to the SEC. The SEC highlighted that any other interpretation would undermine the incentives put in place by the whistleblower rules to encourage internal reporting.

For more information on whistleblower protections, see Practice Note, Whistleblower Protections under Sarbanes-Oxley and the Dodd-Frank Act.