Courts Will Now Look at Employee’s “Reasonable Belief” of a Federal Fraud or Securities Violation Under The Sarbanes-Oxley Act

ATTORNEY NEWSLETTER

Courts have lowered the level of proof required by employees who want to report a potential fraud or securities violation of the Sarbanes-Oxley act. The 2nd Circuit recently decided in the case of Nielsen v. AECOM Technology Corp that a new “reasonable person” standard would apply to Sarbanes-Oxley whistleblowers under Section 1514A, instead of the original “definitively and specifically” standard. Section 1514A protects whistleblowing employees from employer retaliation. In a 2010 decision, Sarbanes-Oxley whistleblowers were required to “definitively and specifically relate to one of the listed categories of fraud or securities violations” in Section 1514(a)(1) of the Sarbanes-Oxley act. Vodopia v. Koninklijke Philips Elecs, N.V., 398 F. App’x 659 (2d Cir.) Now, courts will now look at the reasonableness of the employee’s belief of a violation.

This means two things: 1) whether the employee himself believes the employer’s conduct was a violation; and 2) whether a reasonable person in the employee’s situation would view the employer’s conduct as a violation. This new relaxed standard will go a long way towards aiding and protecting Sarbanes-Oxley whistleblowers.

Evans Law Firm, Inc., Inc. handles whistleblower claims, banking, consumer, and insurance frauds, employment law, annuities fraud, financial and physical elder abuse, personal injury cases, and annuities fraud. If you believe you know someone or you yourself have been a victim of financial fraud by an individual, bank, or insurance company, contact Evans Law Firm, Inc. at (415) 441-8669 or email [email protected] for a free and confidential consultation.