Thursday 13 March 2014

USA: Whistle blowing protection and the Sarbanes-Oxley Act 2002

Earlier this month the Supreme Court gave judgment in Lawson v FMR LLC: see here (pdf). The case concerned the whistle blowing protection provided by section section 1514A of 18 US Code, introduced by section 802 ("Protection for Employees of Publicly Traded Companies Who Provide Evidence of Fraud") of the Sarbanes-Oxley Act 2002. At the relevant time, Section 1514A provided that “No [public] company . . . , or any officer, employee, contractor, subcontractor, or agent of such company, may discharge, demote, suspend, threaten, harass, or in any other manner discriminate against an employee in the terms and conditions of employment because of [whistleblowing or other protected activity].”

The issue before the court was the extent of the section 1514A protection: did it apply only to employees of the public company? The court held, by majority, that it applied not only to employees of the public company but also to the employees of contractors and subcontractors (e.g., investment advisers, law firms and accounting firms).

No comments: