District of Massachusetts Adopts Broad Whistleblower Definition

District of Massachusetts Adopts Broad Whistleblower Definition

According to Lexology, a district of Massachusetts judge has ruled in favor of Richard Ellington in the Ellington v. Giacoumakis case, denying the defendant’s claim that Dodd-Frank whistleblower protections only apply to those who report violations directly to the SEC.

Ellington, a financial advisor at a Massachusetts registered investment firm, felt that the firm may have been distributing misleading information to clients and shared his concerns with Giacoumakis, the firms principal and sole shareholder. He then went on to file a report with the firm’s compliance officer. After the compliance officer began an investigation into the matter, Giacoumakis confronted Ellington, accused him of being the whistleblower who caused the investigation, and subsequently fired him.

After termination, Ellington went on to aid the SEC in an investigation against the firm, where it was found guilty of several violations, and then sued the firm, saying that his termination violated his protection under the Dodd-Frank Act as a whistleblower.

Giacoumakis has defended his actions, stating that due to Ellington only going to the SEC after being terminated, he did not fit the qualifications to be considered a whistleblower.

However, the court rejected Giacoumakis’s claims, stating that, although § 78u-6(a)(6) of the Dodd-Frank Act mentions protecting those who give information to the Commission (and thus not including any other entity), § 78u-6(h)(1)(A)(iii)  states that Dodd-Frank protects employees from retaliation for making disclosures that are required or protected under the Sarbanes-Oxley Act of 2002, which include internal disclosures like Ellington’s.

Employers should take this case into consideration before taking employment actions against employees who issue internal complaints, ensuring that their actions cannot be seen as retaliatory.

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About The Author

Felix Shipkevich

Felix Shipkevich

Mr. Shipkevich’s practice focuses on regulatory, transactional, and enforcement matters in the fields of futures, commodities, and derivatives. He works with Futures Commission Merchants (FCMs), Retail Forex Exchange Dealers (RFEDs), Introducing Brokers (IBs), Commodity Pool Operators (CPOs), Commodity Trading Advisors (CTAs), Swap Dealers (SDs), Swap Execution Facilities (SEFs), and domestic and offshore hedge funds. Mr. Shipkevich guides clients on procedures related to registration with the U.S. Commodity Futures Trading Commission (CFTC) and the National Futures Association (NFA), as well as domestic and international regulators in local jurisdictions. Mr. Shipkevich prepares and helps implement compliance, anti-money laundering (AML), and Electronic Trading Systems (ETS) procedures for clients in the commodities and derivatives fields.

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