By Jonathan Stempel and Sarah N. Lynch
Dec 5 (Reuters) - A federal judge has thrown out awhistleblower lawsuit by a former official of a unit ofadvertising company WPP Plc who claimed he was fired inretaliation for reporting accounting irregularities to hissuperiors.
U.S. District Judge Gregory Woods in Manhattan said DanielBerman, who was a finance director at WPP's Neo@Ogilvy LLC unit,did not qualify for whistleblower protections under the 2010Dodd-Frank financial reforms because he did not report hisconcerns to the U.S. Securities and Exchange Commission beforethe retaliation.
The decision, made public on Friday, exacerbates a splitamong federal courts about the reach of the whistleblowerprotections. It overruled an Aug. 15 recommendation by U.S.Magistrate Judge Sarah Netburn to let the case continue.
"Whistleblowers are vulnerable," said Jordan Thomas, aformer SEC lawyer who chairs the whistleblower practice at thelaw firm Labaton Sucharow. "Whistleblowers shouldn't have tomake these sorts of decisions without being fully informed ofthe state of the law, and the state of the law is unsettled."
Lawyers for Berman and Neo did not immediately respond torequests for comment.
Berman said he was fired in April 2013 after he uncoveredsuspect transactions involving delayed payments to mediacompanies, improperly recognized revenue, "reversed" accountingreserves, and lenient payment terms for favored clients.
He sued under Dodd-Frank, which created a private cause ofaction for whistleblowers whose employers retaliate against themfor lawfully providing information to the SEC, or makingdisclosures protected under the Sarbanes-Oxley governance law.
Woods said various U.S. District judges, including one inManhattan, have recognized a "narrow" exception letting peoplesue under Dodd-Frank without first going to the SEC, noting thatSEC regulations adopted in 2011 could support that view.
But he said the 5th U.S. Circuit Court of Appeals in NewOrleans offered a better view, ruling in 2013 that Dodd-Frank's"plain language" required people to first tell the SEC aboutalleged securities law violations before suing employers.
"The court does not question the value or importance ofprotecting whistleblowers from retaliation," but the FifthCircuit approach "is more appropriate than the judicial creationof a 'narrow exception' to an unambiguous text," Woods wrote.
The case is Berman v Neo@Ogilvy LLC et al, U.S. DistrictCourt, Southern District of New York, No. 14-00523. (Reporting by Jonathan Stempel in New York and Sarah N. Lynchin Washington, D.C.; Editing by Leslie Adler)