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Anti-Retaliation Provisions: Dodd-Frank(922) v. Sarbanes Oxley(SEC)

What is the Dodd-Frank Act Section 922?

On July 21, 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank") was enacted.  Dodd-Frank Section 922 creates a new Section 21F of the Securities Exchange Act of 1934 that allows for monetary awards for individuals who "blow the whistle" to the Securities and Exchange Commission ("SEC") about violations of securities laws.

Read more here about SEC Whistleblower Payouts and Rewards.

Dodd-Frank Anti-Retaliation Provision & Protection

Section 922 contains strong anti-retaliation provisions that provide great protection for a broad range of employees.  It provides anti-retaliation protections for employee-whistleblowers against discharge, demotion, suspension, threats, harassment and discrimination for: (1) providing information to the SEC in accordance with Section 922; (2) initiating, testifying in or assisting in an investigation or judicial or administrative action brought by the SEC; and (3) making disclosures that are required or protected by the Sarbanes-Oxley Act of 2002 ("SOX")[1], the Exchange Act and any other law, rule or regulation subject to the SEC's jurisdiction.

Read further here about Internal Protection for Whistleblowers under the Dodd-Frank Act.

Should a whistleblower report to the SEC under Section 922?

The issue arises as to whether a whistleblower must report violations to the SEC to qualify for the anti-retaliation protections afforded under Section 922.  Courts are not in agreement over the answer to this question. Regardless, the anti-retaliation protections depend solely on the report of a violation, and not the SEC's successful enforcement of any reported violation.

The scope of Section 922's anti-retaliation protections is broad. In fact, it applies to not just public companies, but employee-whistleblowers in non-public companies who allege a potential violation of any securities law regulated by the SEC, including violations of the Investment Advisors Act of 1940 by a registered investment adviser at a private company.

Dodd-Frank v. Sarbanes Oxley: Direct or File

One benefit of the whistleblower protections under Section 922 is that such claims can be brought directly in the U.S. district courts. Other federal laws, like SOX, require an employee to file an administrative complaint with the U.S. Department of Labor, Occupational Safety and Health Administration, before bringing suit in federal court.

Dodd-Frank v. Sarbanes Oxley: Stature of Limitations

The statute of limitations for a Section 922 whistleblower is longer than the statute of limitation provided by SOX. A Section 922 claim must be brought within six years from the date of the violation, but can be brought within three years from the date that "facts material to the right of action are known or reasonably should have been known" by the employee-whistleblower. However, all actions (whether or not known) must be brought within 10 years of the violation. This long statute of limitations is consistent with Congress and the SEC's intent to encourage employees to report any such violations. In contrast, SOX requires that a plaintiff file his or her administrative complaint no later than 180 days after the employee-whistleblower becomes aware of the violation or the date of the adverse act.

For further reading about the Statute of Limitations, please click here.

Dodd-Frank v. Sarbanes Oxley: Remedies, Awards & Payout

In addition, there are important distinctions between Section 922 and SOX when it comes to the remedies provided. Although both SOX and Section 922 each allow for reinstatement and attorneys' costs and fees, Section 922 allows an award of two times back pay, while SOX only allows for a single back pay award. However, SOX states that a prevailing employee-whistleblower is entitled to "all relief necessary to make the employee whole" and further allows for "compensation for any special damages sustained as a result of the discrimination …" In reliance on this SOX language, some courts and administrative review boards have allowed awards for emotional distress and damage to the employee-whistleblower's reputation.  Because Section 922 does not contain such language, it is currently not known whether a Section 922 plaintiff will be able to recover such awards.

Next Article: SEC Whistleblower Program Review of Year One

Contact Us To Learn More


We invite you to learn more from our Whistleblowers, Qui Tam & False Claims Act Practice Group. For more information or to schedule a confidential discussion about a potential whistleblower case, please fill out the form on the right. You can also call us at (215) 875-4699.

For further reading:
Anti-Retaliation Provision of the False Claims Act
SEC Whistleblower Law and the Securities Whistleblower Act
SEC Whistleblower Awards & Payouts
SEC Prepare for Whistleblower Payouts and Monetary Awards under Dodd Frank Act

Section 806 of SOX protects an employee who provides information that the employee "reasonably believes constitutes a violation" of the enumerated laws to (1) a federal law enforcement agency or regulatory agency, (2) a committee or member of Congress, (3) a person with supervisory authority over the employee, or (4) a person working for the employer who has the authority to investigate, discover, or terminate misconduct. 18 U.S.C. § 1514A(a)(1).

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