A debate has been raging in the courts over whether an employee who reports suspected misconduct only to his employer but not to the U.S. Securities and Exchange Commission (“SEC”) is a “whistleblower” entitled to the protection of the Anti-Retaliation Provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank”). Last summer, in Asadi v. G.E. Energy (USA), L.L.C., the Fifth Circuit Court of Appeals – the only federal appellate court to address this issue –ruled that an employee who reported a potential Foreign Corrupt Practices Act (“FCPA”) violation to his employer was not a “whistleblower” because he did not “provide information relating to a violation of the securities laws to the SEC,” contradicting five federal district courts which had found internal reporting to be adequate. (I analyzed the Asadi opinion and its likely effect on internal reporting in “When Is A ‘Whistleblower’ Not Really A ’Whistleblower’?”). A few district courts have since adopted the Fifth Circuit’s interpretation, but most have concluded that, consistent with the SEC’s own rules, internal reporting is sufficient to implicate Dodd-Frank’s protections. More on Forbes [...]

House Republicans rolled out a $21.3 billion financial services bill Tuesday that cuts more than $2 billion from President Barack Obama’s budget requests — chiefly at the expense of the Internal Revenue Service and Securities and Exchange Commission. The IRS is promised $10.9 billion, about $341 million below current funding and $1.5 billion less than what Obama has asked for in the new fiscal year that begins Oct. 1. The SEC is essentially frozen in place at $1.4 billion, $300 million below the president’s request. At one level, the 148-page measure defines a new realism and measure of moderation for the GOP which sought much more dramatic cuts in the same bill a year ago. But it also keeps up what’s become an almost relentless war of attrition aimed at slowing the implementation of the president’s most prized initiatives: health care and Wall Street reforms. More on Politico [...]

Wall Street’s industry-funded watchdog is optimistic that its plan to let securities arbitrators immediately report frauds they learn about in the middle of a case will finally take effect. “I feel comfortable that the rule is likely to go forward,” Linda Fienberg, the Financial Industry Regulatory Authority’s arbitration head, told reporters in New York on Wednesday. The watchdog runs its own arbitration system, which is used by brokerages and investors to resolve legal disputes. The U.S. Securities and Exchange Commission is now taking a close look at the rule FINRA wants to impose, the most recent development in a four-year process. The rule, if approved, would let arbitrators stop in the middle of a case to tell FINRA’s staff about possible frauds they learn of that could hurt the investing public. More on Reuters [...]