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Speaker 1: The public seems to be fascinated with whistleblowers. Some make

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Speaker 1: multimillions for their disclosures, while others make nothing but enemies.

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Speaker 1: There are quite a few films about whistle blowers and

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Speaker 1: the problems they face. For example, the film The Insider

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Speaker 1: about Jeoffrey Wigan, the famous whistle blower who told inside

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Speaker 1: secrets of the tobacco industry on sixty minutes. He's got

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Speaker 1: something to say, he wants to say it. I wanted

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Speaker 1: a sixty nine, maybe for the audience. It's just blowyers

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Speaker 1: have something to do on a Sunday night, and maybe

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Speaker 1: it won't change a thing, And people like myself and

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Speaker 1: my family I left hung out to dry, used up alone.

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Speaker 1: The Supreme Court has agreed to take up a case

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Speaker 1: to consider who is a whistle blower entitled to cash

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Speaker 1: awards and protection from firing under the anti retaliation provision

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Speaker 1: of the Dodd Frank Act. Joining us is Robert Hockett,

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Speaker 1: professor at Cornell University Law School. Bob. What's the exact

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Speaker 1: issue the Court will be considering? Well, in one sense

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Speaker 1: to finance regulatory issue, but in another sense effect much

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Speaker 1: broader than that. This case could have come up in

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Speaker 1: connection with virtually any other body of law. So the

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Speaker 1: story is basically this, We've got two enactments that were recently,

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Speaker 1: you know, that were made in the twenty one century

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Speaker 1: in the wake of scandals. On the one hand, we

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Speaker 1: have Sarbanes Oxley after the Enron scandal, and then on

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Speaker 1: the other hand we have a Doc Frank Actor, of course,

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Speaker 1: after the two nine debacle. Now, both acts have whistleblower

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Speaker 1: provisions in them, and here's where things get interesting. One

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Speaker 1: of the acts, namely Sarbanes Oxley, defines whistle blower in

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Speaker 1: one way. The other act, that DoD Frank Act, defined

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Speaker 1: whistle blower in a slightly different way, but also appears

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Speaker 1: to incorporate by reference the Sarbanes Oxley Act. And what

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Speaker 1: that means is that Doc Frank ends up being ambiguous.

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Speaker 1: You have an effect two contrary understandings of what a

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Speaker 1: whistle blower should be. So the question then is what

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Speaker 1: to do in a case of ambiguity like that? Rank. Um, Now,

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Speaker 1: I can tell you a little bit about what we

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Speaker 1: ordinarily do, um if you like, But I'll wait and

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Speaker 1: you if that's the next question you'd like to pose, well,

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Speaker 1: let me ask you this, bob, What's what are the

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Speaker 1: kind of relative advantages of the two regimes Sarbanes Oxley

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Speaker 1: and Dodd Frank. Why does it matter whither you're whistle

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Speaker 1: blower under Dad Frank if you already are under Sarbanes Oxley. Well,

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Speaker 1: the Sarbanes oxley Um definition of whistle blower makes a

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Speaker 1: bit more sense than that in the Dog Frank Act.

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Speaker 1: And it's not clear that the framers or the sort

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Speaker 1: of drafters of Dog Frank actually intended their definition of

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Speaker 1: whistle blowing to be contrary to sarbans Ockley. In fact,

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Speaker 1: it looks like it was maybe an oversight, right there

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Speaker 1: was It was such a long, complex piece of legislation,

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Speaker 1: and the definition was thrown into the kind of afterthought.

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Speaker 1: So the best guess is that dog Frank really didn't

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Speaker 1: intend anything different from Sarbanes ocolet um. But okay, so

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Speaker 1: given that, what does Sarving's Ockley do, well, it defines

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Speaker 1: a whistle blowers somebody who first reports apparent violations within

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Speaker 1: a firm to the higher ups in the firm, giving

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Speaker 1: them a chance to rectify the problem first, and only

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Speaker 1: after you report to the higher ups in the firm,

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Speaker 1: are you then to go outside of the firm and

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Speaker 1: report to the SEC. So the plaintiff in the particular

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Speaker 1: case we're talking about right now basically did that right,

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Speaker 1: He reported within the firm. The problem was, of course,

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Speaker 1: as soon as he reported the violations within the firm,

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Speaker 1: they terminated him before he could report to the SEC. Right.

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Speaker 1: And that's exactly why some starvanz Ockley will define a

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Speaker 1: whistleblower as somebody who first tries to report within the

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Speaker 1: firm and then goes outside of the firm. Dodd Frank,

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Speaker 1: in what appears to have been an oversight, neglected to

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Speaker 1: mention the internal reporting requirement. First it simply goes straight

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Speaker 1: to the report to the SEC idea. And that would

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Speaker 1: be problematically. For one thing, it wouldn't make much sense, um.

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Speaker 1: But for another thing, it especially doesn't make sense when

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Speaker 1: Dodd Frank also incorporates by a reference starvings ox Lee,

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Speaker 1: which gives us that different definition of whistle lower. So, Bob,

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Speaker 1: how is the court likely to rule? Is it likely

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Speaker 1: to make a trip to the SEC necessary or not? Well,

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Speaker 1: the thing is, uh, it's it really isn't going to

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Speaker 1: address that question. What it's really going to try to

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Speaker 1: do is reconcile or deal with the ambiguity that you

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Speaker 1: have when a statute to sort of internally contradictory, as

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Speaker 1: Dodd Frank is with respect to this particular question. And

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Speaker 1: what we usually do in a case like that is

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Speaker 1: we defer to the regulator that is charged with implementing

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Speaker 1: the statutory scheme, that in this case is the SEC.

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Speaker 1: And the SEC has already reconciled the problem, right, that

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Speaker 1: the difference right, The SEC ha said, Okay, there's an ambiguity.

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Speaker 1: We're going to reconcile in favor of what's most sensible.

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Speaker 1: What's most sensible is the Sarbanes Okley understanding of whistleblower,

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Speaker 1: which we actually believe Congress meant to incorporate in full

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Speaker 1: and Dodd Frank anyway, and there were simply a scrivenerus

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Speaker 1: error or some such thing that accounts for the full

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Speaker 1: Starvings Oxley definition not having been sort of rearticulated, and

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Speaker 1: Don Prank, that's what the SEC has decided. Usually the

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Speaker 1: courts differ to the SEC in a case like this

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Speaker 1: if indeed the statutory language is ambiguous or internally contradegree

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Speaker 1: So my guess is that the Supreme Court will do

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Speaker 1: the same. That's what the second Circuit did, and that's,

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Speaker 1: of course, the circuit from which this case is being appealed.

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Speaker 1: The only reason there's a problem here is that the

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Speaker 1: fifth Circuit decided differently. And when you have a circuit split,

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Speaker 1: the Supreme Court sometimes will step in, of course, to

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Speaker 1: reconcile or resolve that circuit split. So my guess is

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Speaker 1: that the Supreme Court resolves it in favor of the

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Speaker 1: second circuit approach About thirty seconds here, Bob, do these

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Speaker 1: awards sometimes seem ridiculously high? I don't. I mean I

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Speaker 1: I myself don't think so thus far, because if you

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Speaker 1: think about it, and the penalties that have been exacted

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Speaker 1: against firms for financial fraud another kind of financialness doing

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Speaker 1: have been pretty paltry in relation to the magnitude of

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Speaker 1: the harms they have caused. Given that something else, I

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Speaker 1: have to leave it there. Thank you. That's Bob Hocken.

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Speaker 1: He's a professor at Cornell University Law School.