New Financial Reform Law Provides Assorted Employee Whistleblower Protections

By Ted Olsen

President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank" or "Act"), Pub. L. 111-203, on July 21, 2010. By any measure, the Act is "complex" legislation. It has 552 sections, most with scores of subparts. The Senate version of the law had some 1300 pages; the Act reported by the Conference Committee was more than 2300 pages in length. The Act amends more than 30 existing federal laws, creates a host of new government entities with new and extensive powers, and adds to the authorities of existing entities including the Securities and Exchange Commission, the Commodity Futures Trading Commission, the Federal Reserve System, the Comptroller of the Currency, and the Federal Deposit Insurance Corporation. The ambitious scope of the new law - intended to clean up "Wall Street," protect debtors and consumers, restore American financial stability, and yes, even stop sexual- and gender-based violence in the Democratic Republic of the Congo (see, Section 1502) - has few equals.

Protecting employees per se was not one of the main objectives of Dodd-Frank. Nevertheless, because Congress chose to make employees some of the key enforcers of the Act, they provided extensive legal protections for those enforcers - including numerous protections for employee-whistleblowers, as summarized below.

Sarbanes-Oxley Protections Extended to Employees of Private Subsidiaries of Publicly-Traded Companies.
The Sarbanes-Oxley Act (SOX), passed in 2002, generally prohibits public companies that are governed by the Securities Exchange Act of 1934, or that are required to file SEC reports under section 15(d) of the Act, from discriminating against employees because they have committed a lawful act, either internally or externally, to stop corporate fraud. SOX encourages employees to participate in investigations, prosecutions, and proceedings involving mail fraud, bank fraud, wire fraud, securities fraud, alleged violations of SEC rules or regulations, and/or stockholder fraud. SOX also encourages individuals to provide information to Congress, to regulatory agencies, and to the management of their employers about such wrongdoing.

Dodd-Frank, notably, amended SOX so as to reach employers that were not previously covered by Sarbanes-Oxley - and, by doing so, has extended whistleblower protections to employees who were not previously protected by SOX. With the amendments, SOX will extend to "any subsidiary or affiliate whose financial information is included in the consolidated financial statements of" the companies previously covered by SOX. This means that employees of non-public subsidiaries of publicly-traded companies - subsidiaries that heretofore have not been covered by Sarbanes-Oxley - will now be protected by SOX.

Limitations Period for SOX Complaints Extended.
Dodd-Frank also made procedural changes in the law applicable to SOX claims. The limitations period for a SOX complaint - to be filed with the U.S. Department of Labor - was doubled in length, from 90 days to 180 days. Moreover, the limitations period for a SOX complaint - which had previously started when the alleged SOX "violation occur[red]" - will now begin when either the SOX violation occurs or when "the employee [becomes] aware of the violation."

SOX Court Lawsuits to be Tried to Juries.
A SOX claimant, after filing a complaint with the Department of Labor, may file suit in federal court for the alleged discrimination, if the agency does not issue a final decision within 180 days after the complaint was filed, and if the delay was not due to the claimant's bad faith. The new Act now expressly provides that SOX lawsuits, when filed in federal court, are to be tried to juries. This marks a dramatic change from the past, as courts have consistently ruled that SOX claims are for equitable relief, and therefore, not to be tried to juries.

Protections for Employees in the Consumer Financial Products or Services Industry.
Title X of Dodd-Frank also extends whistleblower protections to employees in the "consumer financial products or services" industry, which is broadly defined to include businesses that:

extend credit and service loans,
purchase, sell, or broker loans or other extensions of credit,
extend or broker certain leases of personal or real property that are the functional equivalent of purchase finance arrangements,
provide real estate settlement services (but do not perform appraisals of real estate or personal property),
engage in deposit-taking activities, transmit or exchange funds, or otherwise act as a custodian of funds or any financial instrument for use by or on behalf of a consumer,
provide check cashing, check collection, or check guaranty services,
provide, by any technological means, certain payments or other financial data processing products or services to a consumer,
provide credit counseling to any consumer,
provide services to assist a consumer with debt management or debt settlement, including modifying the terms of any extension of credit, or assisting with foreclosure avoidance,
collect, analyze, maintain, or provide consumer report information or other account information, and
collect debt related to any consumer financial product or service.

Under the Act, a covered employee [1] in the consumer financial products or services industry may not be discriminated against for:

providing information to his or her employer, the Bureau of Financial Protection[2], or any governmental authority or law enforcement agency relating to any violation of Title X of the Act or any other provision of law, rule, order, standard or prohibition set by the Bureau;
testifying in any proceeding resulting from the administration or enforcement of any provision of Title X of the Act or any other law under the Bureau's jurisdiction, or any Bureau rule, order, standard or prohibition;
filing or instituting any proceeding under any federal consumer financial law; or
objecting to, or refusing to participate in, any activity, policy, practice, or assigned task that the employee reasonably believes to be in violation of any law, rule, order, standard, or prohibition, under the Bureau's jurisdiction or authority.

The whistleblower provisions apply to discrimination by any "covered person"[3] or "service provider."[4]

The remedies available to consumer financial products or services industry whistleblowers under Title X do not match those available under the newly-amended SOX. Both laws provide for reinstatement of an employee with full seniority rights, back pay, reasonable attorneys fees, expert witness fees and other litigation fees. However, certain SOX remedies were mysteriously omitted for consumer financial goods and services industry whistleblowers: interest on back pay, "special damages," and "all relief necessary to make the employee whole." Likewise, these newly-created whistleblowers are entitled to "affirmative action to abate the violation" and "compensatory damages," relief not available under the amended SOX or other whistleblower laws.

Protections for Bounty Hunters Who Provide "Original Information" in Securities-Related Investigations.
The provision of Dodd-Frank that has attracted the most public attention is Section 922, which will give employees a financial incentive to blow the whistle on their employers by delivering to federal investigators "original information" leading to the imposition of monetary sanctions of one million dollars or more against those employers for securities law-related violations.

Under Section 922, the SEC will pay between 10 and 30 percent of any collected monetary sanctions to one or more whistleblowers who voluntarily provided "original information" that leads to successful enforcement in any judicial or administrative securities law action it brings. "Original information" is generally defined as information that "(A) is derived from the independent knowledge or analysis of a whistleblower; (B) is not known to the Commission from any other source, unless the whistleblower is the original source of the information; and (C) is not exclusively derived from an allegation made in a judicial or administrative hearing, in a governmental report, hearing, audit, or investigation, or from the news media, unless the whistleblower is a source of the information."

Dodd-Frank prohibits an employer from discriminating against an employee for providing "original information" to the SEC; for initiating, testifying in, or assisting in any investigation or judicial or administrative action of the SEC "based upon or related to such information"; or for making any disclosure required or protected by SOX or any law under the SEC's jurisdiction. The law raises many unanswered questions. For example, it is unclear from the text of the Act whether an employee who gives the SEC information, but does not receive a bounty payment for one of numerous possible reasons, will be protected. Likewise, it is unclear whether an employee who claims a bounty in bad faith will be protected. It is also uncertain whether a whistleblower will be protected if an SEC proceeding is successful, but the whistleblower's information was not material to the outcome.

No Administrative Filing Requirement for Those Who Provide "Original Information" in Securities-Related Investigations.
Unlike most of the whistleblower laws, Dodd-Frank provides that a whistleblower claiming protection under Section 922 may file a federal court lawsuit directly and need not exhaust remedies before the U.S. Department of Labor or any other agency. Parties shall be entitled to a trial by jury.

Lengthy Limitations Period for Lawsuits by Those Who Provide Securities-Related "Original Information."
Section 922, in highly confusing language, provides that a whistleblower has three years after the employee knew or reasonably should have known of facts material to the right of action, or six years after the violation occurred, and in no event more than ten years after the violation took place, to file a federal court lawsuit. Regardless of how this provision is eventually interpreted by the courts, it affords whistleblowers a much longer period in which to assert their rights than under most current whistleblowing laws.

Protections for Bounty Hunters Who Provide "Original Information" in Commodities-Related Investigations.
Section 748 of Dodd-Frank, much like Section 922, discussed above, provides that the Commodity Futures Trading Commission will pay between 10 and 30 percent of any collected monetary sanctions to whistleblowers who provide "original information" that leads to the successful enforcement in any judicial or administrative action it brings. Moreover, the Act prohibits an employer from discriminating against an employee for providing information to the CFTC or otherwise assisting in any investigation or judicial or administrative action of the CFTC "based upon or related to such information." Many of the ambiguities of Section 922 also exist in Section 748, but there is no question that Section 748 creates a new set of protected employees, and creates a financial incentive for employees to assist in the government's prosecution of their employers.

No Administrative Filing Requirement for Those Who Provide "Original Information" in Commodities-Related Investigations.
Parallel to Section 922, discussed above, a commodities-related whistleblower claiming protection under Section 748 may file a federal court lawsuit directly and need not exhaust remedies with any administrative agency.

Lengthy Limitations Period for Lawsuits by Those Who Provide Commodities-Related "Original Information."
As noted above, Section 922 has a very confusing limitations provision, extending from three- to six- to ten-years. Commodities-related whistleblowers have the benefit of a lengthy statute of limitations, but a completely different time period - two years from the date when the violation was allegedly committed. Again, such a whistleblower will be entitled to trial by jury.

Pre-Dispute Arbitration Agreements are Invalid.
Three different parts of the Act, including the part amending SOX, have voided pre-dispute arbitration agreements, as well as any other "agreement, policy form, or condition of employment" waiving any right or remedy provided by SOX or Dodd-Frank.

Inconsistencies Between the Laws.
It should be noted that the various whistleblower provisions of Dodd-Frank are internally inconsistent, as well as inconsistent with other whistleblower protection laws. For example, while SOX imposes personal liability on "any officer, employee, contractor, subcontractor, or agent," who commits prohibited discrimination, the prohibitions specified in Dodd-Frank do not extend personal liability to such individual defendants.

Also, the remedies that Dodd-Frank makes available to various types of whistleblowers are not consistent. One example: the securities-related whistleblowers protected by Section 922 may recover double back pay, a remedy not available to any other whistleblower covered by Dodd-Frank or SOX.

Effective Dates.
Dodd-Frank is so lengthy and convoluted, it is difficult to discern when the whistleblower protection provisions go into effect. Section 4 provides, "Except as otherwise specifically provided in this Act or the amendments made by this Act, this Act and such amendments shall take effect 1 day after the date of enactment of this Act." This would make July 22, 2010 the presumptive effective date.

On the other hand, the SOX amendments appear in a Title of the Act that will not become effective until the so-called "designated transfer date." This is the date by which all the consumer protection functions of the Federal Reserve Bank's Board of Governors, the Federal Trade Commission, the Federal Deposit Insurance Corporation, the Office of Thrift Supervision, the National Credit Union Association, the Department of Housing and Urban Development, the Comptroller of the Currency, and other similar agencies are to be transferred to the newly-created Bureau of Consumer Financial Protection. The "designated transfer date" must be agreed upon by the Secretary of the Treasury and the heads of various affected agencies within 60 days of the new law's enactment, i.e., by September 20, 2010. The "designated transfer date" may be no earlier than January 18, 2011, and no later than July 21, 2011.

Title X of Dodd-Frank, which protects those in the consumer financial products or services industry, will become effective on the designated transfer date (explained above).

Section 922 of the Act, protecting bounty hunters who provide "original information" in securities-related investigations, will take effect two years after the date of the new law's enactment, i.e., July 21, 2012. Meanwhile, the parallel provisions of the law relating to commodities investigation whistleblowers will become effective much earlier, 360 days after Dodd-Frank's enactment, i.e., July 16, 2011.

[1] Section 1057(b) defines "covered employee" as "any individual performing tasks related to the offering or provision of a consumer financial product or service."

[2] Dodd-Frank makes the Bureau of Financial Protection the primary enforcer of the federal consumer financial laws as to the nation’s largest insured banks, savings associations and credit unions, those with total assets of over $10 billion, and any affiliate of such institutions. As to other institutions, the Bureau will coordinate with the prudential regulator in the enforcement of the federal consumer financial laws. It is arguable that the whistleblower protections in Title X will be limited to employees of only those institutions within the jurisdiction of the Bureau. However, because the breadth of the protected activity includes cooperation with "any governmental authority or law enforcement agency [emphasis added]," not just the Bureau, and instituting proceedings in the enforcement of "any federal consumer financial law [emphasis added]," not just Title X, the protections likely extend beyond employees of institutions directly governed by the Bureau.

[3] The Act defines "covered person" as "any person that engages in offering or providing a consumer financial product or service," and any affiliate of any such person if the affiliate acts as a service provider to the said person. (Sec. 1002(6).)

[4] "Service provider" is defined in Dodd-Frank as "any person that provides a material service to a covered person in connection with the offering or provision by such covered person of a consumer financial product or service," including a person that designs, operates, or maintains the consumer financial product or service, as well as a person that processes transactions relating to the consumer financial product or service. (Sec. 1002(26).)

Sherman & Howard has prepared this advisory to provide general information on recent legal developments that may be of interest. This advisory does not provide legal advice for any specific situation. This does not create an attorney-client relationship between any reader and the Firm. If you want legal advice on a specific situation, you must speak with one of our lawyers and reach an express agreement for legal representation.

	Contact Us Services Attorneys News and Events Publications About the Firm Inclusiveness Careers Blog In the Media Events and Registration Press Releases Speaking Engagements Articles Client Advisories Subscriptions History Offices Pro Bono Interlaw Contact Us Culture Legal Opportunities Support Staff Publications Client Advisories Home > Publications > Client Advisories > View New Financial Reform Law Provides Assorted Employee Whistleblower Protections By Ted Olsen President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank" or "Act"), Pub. L. 111-203, on July 21, 2010. By any measure, the Act is "complex" legislation. It has 552 sections, most with scores of subparts. The Senate version of the law had some 1300 pages; the Act reported by the Conference Committee was more than 2300 pages in length. The Act amends more than 30 existing federal laws, creates a host of new government entities with new and extensive powers, and adds to the authorities of existing entities including the Securities and Exchange Commission, the Commodity Futures Trading Commission, the Federal Reserve System, the Comptroller of the Currency, and the Federal Deposit Insurance Corporation. The ambitious scope of the new law - intended to clean up "Wall Street," protect debtors and consumers, restore American financial stability, and yes, even stop sexual- and gender-based violence in the Democratic Republic of the Congo (see, Section 1502) - has few equals. Protecting employees per se was not one of the main objectives of Dodd-Frank. Nevertheless, because Congress chose to make employees some of the key enforcers of the Act, they provided extensive legal protections for those enforcers - including numerous protections for employee-whistleblowers, as summarized below. Sarbanes-Oxley Protections Extended to Employees of Private Subsidiaries of Publicly-Traded Companies. The Sarbanes-Oxley Act (SOX), passed in 2002, generally prohibits public companies that are governed by the Securities Exchange Act of 1934, or that are required to file SEC reports under section 15(d) of the Act, from discriminating against employees because they have committed a lawful act, either internally or externally, to stop corporate fraud. SOX encourages employees to participate in investigations, prosecutions, and proceedings involving mail fraud, bank fraud, wire fraud, securities fraud, alleged violations of SEC rules or regulations, and/or stockholder fraud. SOX also encourages individuals to provide information to Congress, to regulatory agencies, and to the management of their employers about such wrongdoing. Dodd-Frank, notably, amended SOX so as to reach employers that were not previously covered by Sarbanes-Oxley - and, by doing so, has extended whistleblower protections to employees who were not previously protected by SOX. With the amendments, SOX will extend to "any subsidiary or affiliate whose financial information is included in the consolidated financial statements of" the companies previously covered by SOX. This means that employees of non-public subsidiaries of publicly-traded companies - subsidiaries that heretofore have not been covered by Sarbanes-Oxley - will now be protected by SOX. Limitations Period for SOX Complaints Extended. Dodd-Frank also made procedural changes in the law applicable to SOX claims. The limitations period for a SOX complaint - to be filed with the U.S. Department of Labor - was doubled in length, from 90 days to 180 days. Moreover, the limitations period for a SOX complaint - which had previously started when the alleged SOX "violation occur[red]" - will now begin when either the SOX violation occurs or when "the employee [becomes] aware of the violation." SOX Court Lawsuits to be Tried to Juries. A SOX claimant, after filing a complaint with the Department of Labor, may file suit in federal court for the alleged discrimination, if the agency does not issue a final decision within 180 days after the complaint was filed, and if the delay was not due to the claimant's bad faith. The new Act now expressly provides that SOX lawsuits, when filed in federal court, are to be tried to juries. This marks a dramatic change from the past, as courts have consistently ruled that SOX claims are for equitable relief, and therefore, not to be tried to juries. Protections for Employees in the Consumer Financial Products or Services Industry. Title X of Dodd-Frank also extends whistleblower protections to employees in the "consumer financial products or services" industry, which is broadly defined to include businesses that: extend credit and service loans, purchase, sell, or broker loans or other extensions of credit, extend or broker certain leases of personal or real property that are the functional equivalent of purchase finance arrangements, provide real estate settlement services (but do not perform appraisals of real estate or personal property), engage in deposit-taking activities, transmit or exchange funds, or otherwise act as a custodian of funds or any financial instrument for use by or on behalf of a consumer, provide check cashing, check collection, or check guaranty services, provide, by any technological means, certain payments or other financial data processing products or services to a consumer, provide credit counseling to any consumer, provide services to assist a consumer with debt management or debt settlement, including modifying the terms of any extension of credit, or assisting with foreclosure avoidance, collect, analyze, maintain, or provide consumer report information or other account information, and collect debt related to any consumer financial product or service. Under the Act, a covered employee [1] in the consumer financial products or services industry may not be discriminated against for: providing information to his or her employer, the Bureau of Financial Protection[2], or any governmental authority or law enforcement agency relating to any violation of Title X of the Act or any other provision of law, rule, order, standard or prohibition set by the Bureau; testifying in any proceeding resulting from the administration or enforcement of any provision of Title X of the Act or any other law under the Bureau's jurisdiction, or any Bureau rule, order, standard or prohibition; filing or instituting any proceeding under any federal consumer financial law; or objecting to, or refusing to participate in, any activity, policy, practice, or assigned task that the employee reasonably believes to be in violation of any law, rule, order, standard, or prohibition, under the Bureau's jurisdiction or authority. The whistleblower provisions apply to discrimination by any "covered person"[3] or "service provider."[4] The remedies available to consumer financial products or services industry whistleblowers under Title X do not match those available under the newly-amended SOX. Both laws provide for reinstatement of an employee with full seniority rights, back pay, reasonable attorneys fees, expert witness fees and other litigation fees. However, certain SOX remedies were mysteriously omitted for consumer financial goods and services industry whistleblowers: interest on back pay, "special damages," and "all relief necessary to make the employee whole." Likewise, these newly-created whistleblowers are entitled to "affirmative action to abate the violation" and "compensatory damages," relief not available under the amended SOX or other whistleblower laws. Protections for Bounty Hunters Who Provide "Original Information" in Securities-Related Investigations. The provision of Dodd-Frank that has attracted the most public attention is Section 922, which will give employees a financial incentive to blow the whistle on their employers by delivering to federal investigators "original information" leading to the imposition of monetary sanctions of one million dollars or more against those employers for securities law-related violations. Under Section 922, the SEC will pay between 10 and 30 percent of any collected monetary sanctions to one or more whistleblowers who voluntarily provided "original information" that leads to successful enforcement in any judicial or administrative securities law action it brings. "Original information" is generally defined as information that "(A) is derived from the independent knowledge or analysis of a whistleblower; (B) is not known to the Commission from any other source, unless the whistleblower is the original source of the information; and (C) is not exclusively derived from an allegation made in a judicial or administrative hearing, in a governmental report, hearing, audit, or investigation, or from the news media, unless the whistleblower is a source of the information." Dodd-Frank prohibits an employer from discriminating against an employee for providing "original information" to the SEC; for initiating, testifying in, or assisting in any investigation or judicial or administrative action of the SEC "based upon or related to such information"; or for making any disclosure required or protected by SOX or any law under the SEC's jurisdiction. The law raises many unanswered questions. For example, it is unclear from the text of the Act whether an employee who gives the SEC information, but does not receive a bounty payment for one of numerous possible reasons, will be protected. Likewise, it is unclear whether an employee who claims a bounty in bad faith will be protected. It is also uncertain whether a whistleblower will be protected if an SEC proceeding is successful, but the whistleblower's information was not material to the outcome. No Administrative Filing Requirement for Those Who Provide "Original Information" in Securities-Related Investigations. Unlike most of the whistleblower laws, Dodd-Frank provides that a whistleblower claiming protection under Section 922 may file a federal court lawsuit directly and need not exhaust remedies before the U.S. Department of Labor or any other agency. Parties shall be entitled to a trial by jury. Lengthy Limitations Period for Lawsuits by Those Who Provide Securities-Related "Original Information." Section 922, in highly confusing language, provides that a whistleblower has three years after the employee knew or reasonably should have known of facts material to the right of action, or six years after the violation occurred, and in no event more than ten years after the violation took place, to file a federal court lawsuit. Regardless of how this provision is eventually interpreted by the courts, it affords whistleblowers a much longer period in which to assert their rights than under most current whistleblowing laws. Protections for Bounty Hunters Who Provide "Original Information" in Commodities-Related Investigations. Section 748 of Dodd-Frank, much like Section 922, discussed above, provides that the Commodity Futures Trading Commission will pay between 10 and 30 percent of any collected monetary sanctions to whistleblowers who provide "original information" that leads to the successful enforcement in any judicial or administrative action it brings. Moreover, the Act prohibits an employer from discriminating against an employee for providing information to the CFTC or otherwise assisting in any investigation or judicial or administrative action of the CFTC "based upon or related to such information." Many of the ambiguities of Section 922 also exist in Section 748, but there is no question that Section 748 creates a new set of protected employees, and creates a financial incentive for employees to assist in the government's prosecution of their employers. No Administrative Filing Requirement for Those Who Provide "Original Information" in Commodities-Related Investigations. Parallel to Section 922, discussed above, a commodities-related whistleblower claiming protection under Section 748 may file a federal court lawsuit directly and need not exhaust remedies with any administrative agency. Lengthy Limitations Period for Lawsuits by Those Who Provide Commodities-Related "Original Information." As noted above, Section 922 has a very confusing limitations provision, extending from three- to six- to ten-years. Commodities-related whistleblowers have the benefit of a lengthy statute of limitations, but a completely different time period - two years from the date when the violation was allegedly committed. Again, such a whistleblower will be entitled to trial by jury. Pre-Dispute Arbitration Agreements are Invalid. Three different parts of the Act, including the part amending SOX, have voided pre-dispute arbitration agreements, as well as any other "agreement, policy form, or condition of employment" waiving any right or remedy provided by SOX or Dodd-Frank. Inconsistencies Between the Laws. It should be noted that the various whistleblower provisions of Dodd-Frank are internally inconsistent, as well as inconsistent with other whistleblower protection laws. For example, while SOX imposes personal liability on "any officer, employee, contractor, subcontractor, or agent," who commits prohibited discrimination, the prohibitions specified in Dodd-Frank do not extend personal liability to such individual defendants. Also, the remedies that Dodd-Frank makes available to various types of whistleblowers are not consistent. One example: the securities-related whistleblowers protected by Section 922 may recover double back pay, a remedy not available to any other whistleblower covered by Dodd-Frank or SOX. Effective Dates. Dodd-Frank is so lengthy and convoluted, it is difficult to discern when the whistleblower protection provisions go into effect. Section 4 provides, "Except as otherwise specifically provided in this Act or the amendments made by this Act, this Act and such amendments shall take effect 1 day after the date of enactment of this Act." This would make July 22, 2010 the presumptive effective date. On the other hand, the SOX amendments appear in a Title of the Act that will not become effective until the so-called "designated transfer date." This is the date by which all the consumer protection functions of the Federal Reserve Bank's Board of Governors, the Federal Trade Commission, the Federal Deposit Insurance Corporation, the Office of Thrift Supervision, the National Credit Union Association, the Department of Housing and Urban Development, the Comptroller of the Currency, and other similar agencies are to be transferred to the newly-created Bureau of Consumer Financial Protection. The "designated transfer date" must be agreed upon by the Secretary of the Treasury and the heads of various affected agencies within 60 days of the new law's enactment, i.e., by September 20, 2010. The "designated transfer date" may be no earlier than January 18, 2011, and no later than July 21, 2011. Title X of Dodd-Frank, which protects those in the consumer financial products or services industry, will become effective on the designated transfer date (explained above). Section 922 of the Act, protecting bounty hunters who provide "original information" in securities-related investigations, will take effect two years after the date of the new law's enactment, i.e., July 21, 2012. Meanwhile, the parallel provisions of the law relating to commodities investigation whistleblowers will become effective much earlier, 360 days after Dodd-Frank's enactment, i.e., July 16, 2011. [1] Section 1057(b) defines "covered employee" as "any individual performing tasks related to the offering or provision of a consumer financial product or service." [2] Dodd-Frank makes the Bureau of Financial Protection the primary enforcer of the federal consumer financial laws as to the nation’s largest insured banks, savings associations and credit unions, those with total assets of over $10 billion, and any affiliate of such institutions. As to other institutions, the Bureau will coordinate with the prudential regulator in the enforcement of the federal consumer financial laws. It is arguable that the whistleblower protections in Title X will be limited to employees of only those institutions within the jurisdiction of the Bureau. However, because the breadth of the protected activity includes cooperation with "any governmental authority or law enforcement agency [emphasis added]," not just the Bureau, and instituting proceedings in the enforcement of "any federal consumer financial law [emphasis added]," not just Title X, the protections likely extend beyond employees of institutions directly governed by the Bureau. [3] The Act defines "covered person" as "any person that engages in offering or providing a consumer financial product or service," and any affiliate of any such person if the affiliate acts as a service provider to the said person. (Sec. 1002(6).) [4] "Service provider" is defined in Dodd-Frank as "any person that provides a material service to a covered person in connection with the offering or provision by such covered person of a consumer financial product or service," including a person that designs, operates, or maintains the consumer financial product or service, as well as a person that processes transactions relating to the consumer financial product or service. (Sec. 1002(26).) Sherman & Howard has prepared this advisory to provide general information on recent legal developments that may be of interest. This advisory does not provide legal advice for any specific situation. This does not create an attorney-client relationship between any reader and the Firm. If you want legal advice on a specific situation, you must speak with one of our lawyers and reach an express agreement for legal representation. ©2010 Sherman & Howard L.L.C. September 10, 2010 Copyright 2000-2013 Sherman & Howard L.L.C. All rights reserved. Privacy Policy \| Terms of Use