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Dodd-Frank whistleblower protection not international

Federal appeals court rules that whistleblower anti-retaliation provisions do not apply abroad

The Dodd-Frank Wall Street Reform and Consumer Protection Act was designed to protect investors and American citizens from fraud and corruption. But, since most major American companies have a wide international reach, questions inevitably arose as to whether certain provisions of the law apply overseas. Now, a federal court has provided some clarification.

One of the key components of Dodd-Frank is its whistleblower provision. To encourage tips about illegal activity, Dodd-Frank created the Office of the Whistleblower, including an anonymous tip line. The law also included protections against retaliation for whistleblowers, a key element that provides a sense of security for potential whistleblowers.

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Now, the 2nd Circuit Court of Appeals has issued a ruling that indicates that these whistleblower protections do not apply overseas. The case concerns Meng-Lin Liu, a former compliance officer at Siemens China, who claimed that he was retaliated against after reporting alleged wrongdoing. The court dismissed the case, stating clearly that the “provision does not apply extraterritorially,” noting that legislation does not apply abroad unless Congress indicates otherwise.

“The whistleblower, his employer, and the other entities involved in the alleged wrongdoing are all foreigners based abroad, and the whistleblowing, the alleged corrupt activity, and the retaliation all occurred abroad,” the opinion said.

Earlier, a New York district court judge had arrived at the same ruling, though neither court weighed in on the question of whether or not Liu was disqualified from whistleblower protection for not reporting his concerns to the Securities and Exchange Commission until after he was fired. Both courts instead looked at the question of jurisdiction.

Senior Editor

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Rich Steeves

Richard P. Steeves is Senior Editor of InsideCounsel magazine, where he covers the intellectual property and compliance beats. Rich earned a B.A. in English Literature...

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