Whistleblower provisions written into the 2010 Dodd-Frank Act do not protect overseas workers from retaliation, a New York federal judge has ruled in a case that has been closely monitored by the financial industry and legal experts in the U.S.
The case involved a China-based employee Meng-Lin Liu, who filed a whistleblower complaint against his employer Siemens AG in 2011, claiming the company fired him in retaliation for raising concerns internally about fraud and other wrongdoing. Mr. Meng-Lin, a former regional compliance officer for a Chinese subsidiary of Siemens, raised concerns that employees were violating the company’s anti-graft controls as well as the terms of a 2008 plea agreement the company made with the U.S. Justice Department over its violations of the Foreign Corrupt Practices Act.
Siemens filed a motion to have the case dismissed. A U.S. District judge in New York granted the motion, ruling that the Dodd-Frank anti-retaliation provisions did not apply outside of the U.S.
“There’s simply no indication that Congress intended the anti-retaliation provision to apply extraterritoriality,” said Judge William Pauley III his ruling Monday. According to the Wall Street Journal, the judge drew on a 2010 Supreme Court decision in the case of Morrison v. National Australia Bank Ltd. to form his opinion.
“While individuals abroad can be eligible for whistleblower awards under SEC rules … that does not mean that the anti-retaliation provisions of Dodd-Frank extend to overseas whistleblowers,” the Wall Street Journal said, summarizing the judge’s decision.
In forming his opinion, the judge did not consider whether Mr. Meng-Lin’s decision to report the alleged wrongdoing to the SEC until after he was fired rendered him ineligible for the anti-retaliation protections. Previously, at least six other U.S. District judges have ruled contrary to Judge Pauley, the Wall Street Journal explained. Those judges, including two of Judge Pauley’s colleagues in the same federal court, have found that employees who report misdeeds internally first are entitled to the Dodd-Frank whistleblower provisions.