What You Need to Know About the New SEC and Dodd Frank Whistleblower Protection-Part 5

Posted on November 30th, 2017 at 10:01 AM
What You Need to Know About the New SEC and Dodd Frank Whistleblower Protection-Part 5

From the Desk of Jim Eccleston at Eccleston Law LLC:

This is the fifth in a series of posts discussing whistleblower protection. This post will cover whether in-house lawyers are protected from retaliation just like any other employee under the SEC whistleblower program.

Overall, even though in-house lawyers face more hurdles to recover under the SEC whistleblower program (See 17 C.F.R § 240.21F-4(b)(4)), they are still protected from retaliation just like any other employee.

On the other hand, in-house lawyers are still bound by state ethics rules, including a duty to maintain the confidential information of current and former clients. (See ABA Model Rules 1.6 & 1.9). Moreover, according to ABA Model Rules 1.13 & 1.6, in-house lawyers can divulge certain attorney-client confidential information in limited circumstances, but each specific circumstance varies from state to state. Therefore, in-house lawyers should be aware that while SEC ethics rules allow an “attorney appearing and practicing before the SEC to reveal confidential information in limited circumstances,” (See 17 C.F.R. § 205.3) a disclosure does not necessarily preempt state ethics rules. (See, e.g., NYCLA Committee on Professional Ethics, Formal Op. 746; Ethical Conflicts Caused by lawyers as Whistleblowers Under the Dodd-Frank Wall Street Reform Act of 2010 (Oct. 7, 2013). 

However, a California district court recently did in fact rule that an in-house lawyer had a wide latitude to introduce confidential information in a Dodd-Frank retaliation trial against his former employer. The court also found that the SEC ethics rule preempted the California ethics rules to the extent that the California rules were more demanding. (See Wadler v. Bio-Rad Laboratories, Inc., 212 F. Supp. 3d 829 (N.D. Cal. 2016), appeal filed, No. 17-16193 (9th Cir. June 8, 2017).

The attorneys of Eccleston Law LLC represent investors and advisors nationwide in securities and employment matters. The securities lawyers at Eccleston Law also practice a variety of other areas of practice for financial advisors including Broker Litigation & ArbitrationStrategic Consulting ServicesRegulatory  MattersTransition Contract Review, and much more. Our attorneys draw on a combined experience of nearly 65 years in delivering the highest quality legal services. If you are in need of legal services, contact us to schedule a one-on-one consultation today.

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