The United States Supreme Court has granted a petition to review a decision made by the Court of Appeals for the First Circuit. In Lawson v. FMR LLC, the decision in question, the Court of Appeals had previously declared that the whistleblower protection outlined in the Sarbanes-Oxley Act did not extend to employees of any publicly traded company’s contractors. Attorneys at bank fraud law firms in Alameda County say that the Supreme Court’s final ruling will outline what, if any, restrictions to protection exist in the Act.
In the Sarbanes-Oxley Act of 2002, Section 806, public companies are prohibited from retaliating against employees who file reports on suspected violations of the rules set forth by the Securities and Exchange Commission Act of 1934, or federal laws that deal with fraud. The Act, better known as SOX, protects whistleblowers from being harassed at work or fired if they report suspicious behavior or outright instances of law breaking and fraud.
Two former employees of FMR LLC, Jackie Lawson and Jonathan Zang, have brought separate lawsuits against their company, both claiming that they had experienced unlawful retaliation after bringing concerns about the practices of the Fidelity mutual funds companies. Both men had initially brought their complaints to the Occupational Safety and Health Administration, but were shut down by FMR LLC immediately afterwards. In their lawsuits, both Lawson and Zang state that FMR LLC had no right to act against them after they had filed complaints.
The company argued against the lawsuits with the claim that they were not obligated to avoid retaliation in this case, because SOX only provides protection to “covered employees” in 1514A(a), and offers no protection to the employees of private subsidiaries within public companies. FMR LLC demonstrated the difference between “contractor” and “subcontractor” in their employment policies, with the contractor and his employees excluded from whistleblower protection.
The two whistleblowing employees argued that their protection was included in the SOX section, even though they were contracted parties. On appeal, the First Circuit reversed the initial decision, instead ruling that SOX 1514A(a) specifically provides protection to employees of publicly traded companies, and makes no mention of private companies such as contractors. The court found that FMR LLC’s reading of the law was more natural, and said that Congress had not explicitly equated the list of agents who were banned from discriminating with the list of those protected by the Act.
Lawyers at bank fraud law firms in Alameda County say that the U.S. Supreme Court’s decision regarding the First Circuit’s reading will have a lasting impact on all future whistleblower cases. Protected persons will be clearly defined in the Supreme Court’s ruling, and the scope of SOX will be determined—whether it includes both private and public companies, or only public. The ruling will also determine the degree to which whistleblower cases will be referred to the Department of Labor.
At Alameda County-based Evans Law Firm, the experienced bank fraud attorneys offer legal advice, consultation, and representation to anyone who needs protection after reporting suspected fraud or other suspicious activity within his or her company. Call us today at 415-441-8669.