Retention of Employer Documents by Whistleblowers Part 6—Retaining Documents as Protected Activity Under the Dodd-Frank Act

Metal WhistleOne of the most recent and broad whistleblower laws enacted at the federal level was contained in the Dodd–Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act).  Although there is little caselaw on the statute and the protections it may provide for whistleblowers who collect, retain, and disclose information evidencing wrongful conduct, the Dodd-Frank Act’s own language and the regulations enacted by the SEC at the very least seem to provide for protection for individuals who collect incriminating documents and provide those documents to the SEC to support a whistleblower claim.  See 17 C.F.R. § 240.21f-4(b)(1) (in order to qualify for a bounty under the Dodd-Frank whistleblower provisions, the individual must “voluntarily provide” the SEC with information regarding a securities law violation and that information must be “original information,” i.e. non-public, non-privileged, and not previously known to the SEC); 15 U.S.C. § 78u-6(h)(1) (Dodd-Frank’s anti-retaliation provision provides protection for individuals who provide information about securities violations to the SEC, participate or assist in an SEC investigation, or make disclosures “required or protected” under the laws administered by the SEC).

Dodd-Frank’s bounty provisions expressly require individuals to provide the SEC with information that is both (a) not public and (b) not known to the SEC, in order to qualify for a whistleblower bounty.  Consequently, it would seem that the Act not only protects the collection of information, but requires it to make out a successful bounty application.

The most explicit indication that the Dodd-Frank Act protects individuals who collect the confidential information of their employers and disclose these documents to the SEC is found in the SEC’s Rule 21F-17(a).  This rule states that “[n]o person may take any action to impede an individual from communicating directly with the [SEC] staff about a possible securities law violation, including enforcing, or threatening to enforce, a confidentiality agreement…with respect to such communications.”  On its face this Rule appears to (a) protect individuals who disclose their employer’s confidential information to the SEC, (b) prevent employers from taking adverse employment action against an employee who discloses documents to the SEC in contravention of a confidentiality agreement, and (c) prevent employers from bringing a counterclaim that such disclosures violate a confidentiality agreement.  Consequently, although there is little to no current interpretation of this Rule, it appears that the Dodd-Frank Act has provided a large safe harbor for whistleblowers who collect confidential documents from their employers and disclose such documents to the SEC.