Jordan A. Thomas opines on anti-retaliation measures for whistleblowers

When the Dodd-Frank was assembled, language was instilled that protected whistleblowers like never before. Shortly after the Dodd-Frank was signed, a former GE Energy LLC executive, Khaled Asadi claimed he was demoted and then fired after internally reporting concerns that the company had violated the Foreign Corrupt Practices Act while operating in Iraq. Asadi had asked the New Orleans federal appeals court to revive his lawsuit, which had been dismissed by a district court. The Fifth Circuit agreed, ruling that Dodd-Frank only protects whistleblowers who go to the SEC and reside in Louisiana, Mississippi, and Texas.

Companies have feared that the SEC’s rewards would encourage employees to avoid internal reporting and go straight to the SEC if they see a potential fraud. However, by advising courts to adopt a view that the law’s anti-retaliation measures only apply to those who go to the commission, “I think they are driving people there,” said Jordan Thomas, a former SEC enforcement lawyer.

“When [GE] made that argument, they sent a message to all their employees that if you want legal and employment protections, you need to report externally,” said Thomas, who now heads the whistleblower representation practice at Labaton Sucharow. “For budget dust, they undermined the trust their employees are going to have in coming forward.”