By Rodney F. Tonkovic, J.D.
An employee who gave information to the SEC as part of a conference call and alleged that he was terminated in retaliation was not a whistleblower. The district court concluded that the employee was not a whistleblower under the Dodd-Frank Act and thus did not state a claim for retaliation. Based on the whistleblower rules at the time, the court explained, a conference call was not one of the prescribed methods of providing information to the SEC. The court accordingly dismissed the complaint and denied leave to amend (Moniodes v. Autonomy Capital (Jersey) LP, August 11, 2021, Woods, G.).
The plaintiff, Nicholas Moniodes, has been an IT professional in the financial services industry for over 30 years. Moniodes was hired in 2014 by Autonomy Americas LLC, a subsidiary of Autonomy Capital (Jersey), although he asserts that he worked for both entities. In 2018, he was promoted to Co-Head of Technology, a role in which he oversaw Autonomy's cybersecurity efforts. In that capacity, Moniodes concluded in 2018 that the company's data security practices violated SEC rules and communicated that belief to senior management.
Conference call and termination. In mid-2019, Moniodes joined two other department heads on a conference call to the SEC. Because the department heads considered to be Moniodes a consultant, he did not answer the SEC's questions himself—the department heads instead repeated what Moniodes told them verbatim to the SEC. Among other items, the department heads relayed Moniodes's assessment that Autonomy was not in compliance with SEC rules and regulations on data security.
Soon after the conference call, the SEC cited Autonomy for failing to adequately secure its data, and Moniodes led the effort to fix the problem. As time went on, Autonomy's then-CEO repeatedly expressed dissatisfaction with Moniodes's work. In April 2020, Moniodes was abruptly terminated.
Not a whistleblower. Moniodes alleged that he was wrongfully terminated in retaliation for providing information that was then relayed to the SEC. According to Moniodes, by acting with the department heads to provide information to the SEC by telephone, he qualified for whistleblower protection under the Dodd-Frank Act. The court concluded, however, that Moniodes did not meet the statutory definition of a whistleblower.
To qualify as a whistleblower the employee must meet certain statutory requirements. At issue here was the requirement in Rule 21F-9(a) that an individual provide information to the SEC via mail, fax, or the Commission's website: "No other manner would do," the court said. Because a conference call is not one of the methods set out in Rule 21F-9(a), Moniodes did not allege that he was a whistleblower under Dodd-Frank and did not state a claim for retaliation.
This unambiguous mandatory language disposed of Moniodes's claim, the court said, but it briefly considered an alternative interpretation. In his briefing, Moniodes argued that Rule 21F-2 in fact permitted an individual to qualify as a whistleblower even if the information was reported by a method not listed under Rule 21F-9. This interpretation, which was articulated by the SEC in 2015, was clearly rejected by the Supreme Court's Digital Realty holding in 2018. That case unequivocally affirmed that SEC reporting is a prerequisite to Dodd-Frank protection. As the court noted, the SEC subsequently amended the whistleblower rules to make qualifying for retaliation protection easier—the references in the opinion are to the rules in effect as of April 2020, before the amendments were adopted.
The case is No. 1:20-cv-5648.