Third Circuit Decision Highlights Key Procedural Distinctions Between Sarbanes-Oxley and Dodd-Frank Whistleblower Protection Provisions

Dodd-Frank Retaliation Claims Not Exempt from Mandatory Arbitration

On December 8th, the Third Circuit held in Khazin v. TD Ameritrade Holding Corp that Section 922 Dodd-Frank whistleblower retaliation claims are subject to mandatory arbitration. In what appears to have been a drafting error, the Dodd-Frank Act carves out three whistleblower protection provisions from mandatory arbitration (Section 806 of the Sarbanes-Oxley Act, Section 1057 of Dodd-Frank, and Section 748 of the Dodd-Frank Act), but fails to exempt Section 922 claims from mandatory arbitration. The Third Circuit, however, reasoned that since Congress did not append an anti-arbitration provision to Section 922 while contemporaneously adding such provisions elsewhere, the omission was deliberate.

Khazin is the first appellate decision holding that Section 922 Dodd-Frank Act whistleblower claims are subject to mandatory arbitration, but is consistent with prior district court decisions, including Murray v. UBS Securities LLC, 2014 WL 285093, at *8 (S.D.N.Y. Jan. 27, 2014) and Ruhe v. Masimo Corp., SACV 11-00734-CJC(JCGx), 2011 WL 4442790, at *4 (C.D. Cal. Sept. 16, 2011).

Procedural Distinctions Between Sarbanes-Oxley and Dodd-Frank Whistleblower Protection

In Khazin, the Third Circuit notes that “the Sarbanes-Oxley and Dodd-Frank causes of action differ significantly in a number of respects.” Recent developments in SOX and Dodd-Frank Act jurisprudence reveal that there are indeed key distinctions between these whistleblower remedies. And as these distinctions continue to emerge, Sarbanes-Oxley appears to be a stronger remedy than Section 922 of Dodd-Frank in several respects. Accordingly, whistleblowers should strongly consider filing a SOX retaliation claim within the short 180-day SOX statute of limitations rather than assuming that they can pursue a retaliation claim under the longer Section 922 Dodd-Frank statute of limitations.

Dodd-Frank Whistleblower Protections

Protections for SEC Whistleblowers Post-Digital Realty (11-6-2020)

Sarbanes-Oxley Whistleblower Protection for SEC Whistleblowers

The whistleblower lawyers at Zuckerman Law have substantial experience litigating Sarbanes Oxley whistleblower retaliation claims. To learn more about corporate whistleblower protections, see our Sarbanes-Oxley Whistleblower Protection FAQ.

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