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REGULATORY REFORM TASK FORCE
Court Rejects Retroactivity of Dodd–Frank’s Whistleblower Remedies
April 18, 2013
Since the 2010 enactment of the Dodd–Frank Wall Street Reform and Consumer Protection Act, a
recurring question in judicial opinions interpreting the Act’s whistleblower provisions has been whether
these provisions should be given retroactive effect. Although federal courts have split on this question
with respect to the Act’s restrictions on mandatory arbitration, 1 a federal district court in Virginia has now
held that the Act’s remedies for whistleblowers who share information with the Securities and Exchange
Commission (SEC) do not apply retroactively.
The plaintiff in the case, Jones v. SouthPeak Interactive Corp.,2 had been employed as the chief financial
officer of one of the defendants. After allegedly concluding that the company falsely reported inflated
profits, the plaintiff attempted to report her suspicions to the company’s internal audit committee and
outside counsel. When her efforts allegedly failed to produce satisfactory results, she filed a complaint
with the SEC’s Enforcement Division in 2009. The company terminated her employment several days
later.
The plaintiff ultimately sued under the Sarbanes–Oxley Act of 2002 (SOX)3 and Dodd–Frank 4 for unlawful
retaliation. In response, the defendants moved to dismiss on the ground (among others) that the plaintiff’s
Dodd–Frank claim was barred by the general presumption against retroactivity.5
The plaintiff’s Dodd–Frank claim arose under 15 U.S.C. § 78u-6(h), which prohibits an employer from
discriminating against a “whistleblower” for lawfully providing information to the SEC, assisting in an SEC
investigation or administrative action, or making disclosures required or protected by the federal securities
laws.6 Although this prohibition overlaps with the whistleblower protections of SOX, the remedies
available under Dodd–Frank include a larger award of double back pay plus interest,7 which the plaintiff
sought in her complaint. The defendants argued that this provision, which took effect in July 2010, could
not be used to increase a potential back-pay award arising from a termination that took place in 2009.
1 See generally Wong v. CKX, Inc., 890 F. Supp. 2d 411, 423 & n.2 (S.D.N.Y. 2012) (noting disagreement among courts deciding
retroactive effect of Dodd–Frank’s ban on mandatory arbitration in retaliation cases under the Sarbanes–Oxley Act of 2002).
2 No. 3:12cv443, 2013 WL 1155566, 2013 U.S. Dist. LEXIS 37999 (E.D. Va. Mar. 19, 2013).
3 18 U.S.C. § 1514A.
4 15 U.S.C. § 78u-6(h).
5 See generally Fernandez-Vargas v. Gonzales, 548 U.S. 30, 37 (2006) (“Statutes are disfavored as retroactive when their
application ‘would impair rights a party possessed when he acted, increase a party’s liability for past conduct, or impose new duties
with respect to transactions already completed.’” (quoting Landgraf v. USI Film Prods., 511 U.S. 244, 280 (1994)).
6 15 U.S.C. § 78u-6(h)(1)(A).
7 Id. § 78u-6(h)(1)(C)(ii); cf. 18 U.S.C. § 1514A(c)(2)(B) (entitli ng a prevailing SOX plaintiff to the actual amount of back pay plus
interest).
