Federal Court Retroactively Applies Whistleblower Protections
The United States District Court for the Southern District of New York has ruled that Dodd-Frank’s whistleblower protections apply retroactively to protect employees of private subsidiaries of public companies. The Court opined that Dodd-Frank merely clarified the ambiguity in Sarbanes-Oxley that existed before Dodd-Frank. Rejecting a “presumption against retroactive legislation,” the Court argued that retroactive application is permissible where an amendment merely clarifies existing law. The Court supported its decision by examining the legislative history of Sarbanes-Oxley and Dodd-Frank. The plaintiff in the case had claimed that he was wrongfully terminated for raising fraud claims in connection with obtaining a public contract. The Court distinguished its opinion from Lawson v. FMR, which held that employees of a public mutual fund’s adviser and administrator do not have whistleblower protections because they work for a contractor to a public company not for a subsidiary whose financials are included in the public company financials.