Standing and Snitches

• Pages: 665-678
• Date: 01 July 2024
• Published date: 01 July 2024
• Author: Emily Strauss
• Subject Matter: Derecho Público y Administrativo

Standing and Snitches

By Emily Strauss

*

The rules of the SEC’s whistleblower program, established in the Dodd-Frank Act

and building on the Sarbanes-Oxley Act, purport to preempt state attorney-client priv-

ilege laws. Though this preemption is controversial and generated outcry by the legal

community upon its enactment, it has garnered remarkably little attention in the last

ten years, and in twenty years, has not produced serious legal challenge. Why not? In

this article, I argue that, because of the secrecy shrouding the SEC whistleblower pro-

gram, establishing standing to challenge the SEC’s purported preemption is prohibi-

tively diff‌icult, and I assess creative means through which litigants could establish

standing for such a lawsuit.

Contents

Introduction.............................................................................................. 665

I. Background............................................................... .......................... 667

II. Possible Paths to Standing ................ .................................................. 668

A. Standing of Snitched-Upon Clients to Challenge Preemption ....... 669

B. Standing of State Bar Associations to Challenge Preemption........ 672

C. Standing of States to Challenge Preemption ................................. 674

D. Standing of Snitch for Declaratory Judgment to Uphold

Preemption.................................................................................... 676

E. Summing Up Standing.................................................................. 677

Conclusion................................................................................................ 678

INTRODUCTION

In the wake of the Enron scandal, Congress passed the Sarbanes-Oxley Act of

2002. Claiming authority thereunder, the SEC promulgated rules to allow attor-

neys to report known securities violations to the SEC, even if doing so would

breach attorney-client privilege. Since 2002, the SEC has asserted that those

* Associate Professor,University of California College of the Law–San Francisco. For helpful com-

ments, I am grateful to Scott Dodson, Joe Grundfest, Alex Platt, and Ernie Young. Errors are my own.

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