Academic journal article Journal of Corporation Law

Why Dodd-Frank's Whistleblower Provision Blows: Its Failure to Protect Overseas Whistleblowers

Academic journal article Journal of Corporation Law

Why Dodd-Frank's Whistleblower Provision Blows: Its Failure to Protect Overseas Whistleblowers

Article excerpt

  I. INTRODUCTION  II. BACKGROUND      A. Who is a Whistleblower?      B. Sarbanes-Oxley and Its Whistleblower Provision      C. Dodd-Frank and Its Whistleblower Provision      D. The Principles of Extraterritorial Application      E. Extraterritorial Application of U.S. Employment Law         1. Extraterritorial Application of the Age Discrimination in            Employment Act         2. Extraterritorial Application of Title VII         3. Extraterritorial Application of the Fair Labor Standards            Act and the Equal Pay Act.         4. Extraterritorial Application of SOX's Whistleblower            Provision         5. Extraterritorial Application of Dodd-Frank's Whistleblower            Provision III. ANALYSIS      A. The Presumption Against Extraterritoriality      B. Asadi and Liu Relied on the Morrison v. National Australia         Bank Analysis      C. The Standard of Extraterritorial Application Under the ADEA         and Title VII      D. What Happens When U.S. Laws That Have Extraterritorial         Application Conflict With Local Laws in the Foreign Territory         1. An Example of the Foreign Law Defense: The Mahoney v.            RFE/RL, Inc. Case      E. Why the FLSA Does Not Have Extraterritorial Application  IV. RECOMMENDATION      A. The Implications of Dodd-Frank's Whistleblower Provision         Not Having Extraterritorial Application         1. Why Dodd-Frank Should Protect Overseas Whistleblowers         2. Extraterritorial Application of Bounty Awards.      B. It Is Very Unlikely that the Courts Will Provide a Different         Interpretation      C. Congress Should Amend Dodd-Frank to Protect Overseas         Whistleblowers         1. Applying the Proposed Dodd-Frank Amendment to the Facts of            Asadi and Liu   V. CONCLUSION 

I. INTRODUCTION

In July 2010, President Barack Obama signed into law the Dodd-Frank Wall Street and Consumer Protection Act (Dodd-Frank). (1) Dodd-Frank's purpose was "[t]o promote the financial stability of the United States by improving accountability and transparency in the financial system, to end 'too big to fail,' to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices." (2) One way that Dodd-Frank aims to promote accountability and transparency in the financial system is to incentivize and protect whistleblowers that report violations of the securities laws. (3)

As Congress debated the bill, Dodd-Frank's whistleblower provision received little notice. (4) Despite initial obscurity, the provision has gained a lot of attention particularly because it allows whistleblowers to receive monetary awards for tips they report to the Securities Exchange Commission (SEC). (5) In fiscal year 2012, the SEC received 3001 tips from whistleblowers. (6) In fiscal year 2013, the number of tips the SEC received increased to 3238. (7) These tips concerned corporate disclosures and financials, fraud, and manipulation. (8) In both 2012 and 2013, tips came from all 50 U.S. states. (9) In 2012, tips came from 49 countries outside the United States, and in 2013, tips came from 68 countries outside the United States. (10) This Note is concerned with the whistleblower tips that come from outside the United States, particularly the anti-retaliation protection Dodd-Frank offers to these overseas whistleblowers. In this Note, the term overseas whistleblowers describes U.S. citizens who work for American controlled companies in foreign countries and who disclose any violations of the securities laws by those companies to the SEC.

This Note is organized as follows: Part II describes who is a whistleblower, as defined by the common law, the Sarbanes-Oxley Act of 2002 (SOX) and Dodd-Frank. It then addresses the theories that favor applying U.S. law extraterritorially and discusses extraterritorial application of U.S. federal employment law, focusing on the Age Discrimination in Employment Act of 1967 (ADEA), Title VII of the Civil Rights Act of 1964 (Title VII), the Fair Labor Standards Act of 1938 (FLSA), the Equal Pay Act of 1963 (EPA), and the whistleblower provisions in SOX and Dodd-Frank. …

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