F rom 2007-2009, the United States experienced what many commentators believe was the worst economic crisis since the Great Depression. In the wake of the financial crisis, policymakers began working on legislation to reform the financial system, and in July 2010, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank or the Act). Title IX of Dodd-Frank, entitled "Investor Protections and Improvements to the Regulation of Securities," focuses on the powers and authorities of the Securities and Exchange Commission (SEC), an independent agency created by the Securities and Exchange Act of 1934 to enforce federal securities law. Title IX authorizes the SEC to promulgate certain rules intended to enhance corporate accountability and governance. This report discusses two aspects of Title IX that have seen significant developments in early 2018. First, in February 2018, the Supreme Court rendered a potentially significant decision with respect to a new SEC whistleblower program instituted by Dodd-Frank, resolving a dispute that had arisen among the lower courts as to the scope of individuals who could avail themselves of anti-retaliation protections provided by the Act. The report discusses the SEC's adoption of the rule, the rule's operation, and potential challenges that may be brought to the pay ratio disclosure requirement now that it is in operation. In a ruling that narrows the scope of Section 922, on February 21, 2018, the Supreme Court issued a decision in Digital Realty, Inc. v. Somers . Specifically, in Digital Realty , the Court held that Section 922's whistleblower protections do not apply to internal whistleblowers—that is, those who report violations within their organizations but not to the SEC. This tension between Dodd-Frank's definition of the term "whistleblower" and its incorporation of SOX in the anti-retaliation provision is at the heart of Digital Realty . Dodd-Frank Pay Ratio Disclosure Rule: Recent Developments

Section 953(b) of Dodd-Frank directs the SEC to promulgate a rule requiring reporting companies to disclose in certain public filings the ratio of (a) the median annual total compensation of all of its employees (i.e., the median employee's compensation) to (b) the annual total compensation of its chief executive officer. In setting forth the "formula" for the pay ratio calculation, as discussed in more detail below, the SEC opted for a largely flexible approach that it regarded as being compliant with applicable statutory requirements while taking due consideration of compliance costs. The Financial CHOICE Act of 2017 would repeal the section of Dodd-Frank authorizing the conflict minerals rule.
From 2007-2009, the United States experienced what many commentators believe was the worst economic crisis since the Great Depression. In the wake of the crisis, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) in 2010. Title IX of Dodd-Frank, entitled "Investor Protections and Improvements to the Regulation of Securities," focuses on the powers and authorities of the Securities and Exchange Commission (SEC) and authorizes the SEC to promulgate certain rules intended to enhance corporate accountability and corporate governance. This report discusses recent developments with respect to two aspects of Title IX, including legislative proposals such as the Financial CHOICE Act of 2017 (H.R. 10, 115th Cong.) that would change or repeal aspects of Title IX.
First, in February 2018, the Supreme Court issued a potentially significant decision in Digital Realty, Inc. v. Somers. The case involved the new SEC whistleblower program instituted by Section 922 of Dodd-Frank and resolved a dispute that had arisen among the lower courts as to the scope of individuals who could avail themselves of anti-retaliation protections provided by the Act. In Digital Realty, the Court held that Dodd-Frank's whistleblower protections do not apply to internal whistleblowers—that is, those who report violations within their organizations but not to the SEC. The dispute between the parties (and the lower courts) resulted from the tension between Dodd-Frank's definition of the term "whistleblower" and its incorporation of a reference to the Sarbanes-Oxley Act of 2002 in Section 922's anti-retaliation provision. As this report discusses, the Supreme Court's decision has potentially important implications for the enforcement of securities law, especially as Congress considers further changes to Dodd-Frank's whistleblower program.
Second, in early 2018, reporting companies began to formally comply with the SEC's "pay ratio rule." That rule was promulgated pursuant to Section 953(b) of Dodd-Frank, which requires public disclosure of the ratio between the annual total compensation of a company's median employee to the annual total compensation of its Chief Executive Officer (i.e., the company's median worker to CEO pay ratio). In promulgating the rule, the SEC adopted a largely flexible approach that it regarded as satisfying Dodd-Frank's statutory requirements while taking due consideration of the high compliance costs for companies. The report further discusses potential challenges that may be brought to the pay ratio disclosure requirement. Included in this discussion is a comparison between the pay ratio rule and the so-called "conflict minerals rule" and "resource extraction rule" the SEC previously promulgated pursuant to Dodd-Frank.