In Lawson v. FMR LLC, the U.S. Supreme Court held that the Sarbanes-Oxley Act (SOX) protects not just whistleblowers who work at publicly traded companies, but also employees at contractors or subcontractors of those public companies — and many people besides. The sweeping decision focused on the remedial purpose of SOX, and will influence the interpretation of similar whistleblower laws.
This expert analysis by
TELG managing principal R. Scott Oswald was published by Law360 on March 5, 2014. The full article is available at Law360. (Site requires paid subscription.)
SOX Whistleblowers Find a New Friend In Supreme Court
In deciding Lawson v. FMR LLC, the first whistleblower case heard under the Sarbanes-Oxley Act, the justices of the U.S. Supreme Court agreed that the law’s ambiguous anti-retaliation provision offered two alternatives, both unappealing:
- Either it doesn’t protect a large class of whistleblowers — whom, in many cases, are the people most likely to discover financial wrongdoing;
- Or it protects virtually anyone hired by a publicly traded company, or its employees, either directly or indirectly, and forbids reprisal for a huge range of fraud reports.
Led by Justice Ruth Bader Ginsburg, a 6-3 majority unflinchingly chose the broader interpretation, instantly giving SOX "a stunning reach," in the words of a dumbfounded dissent by Justice Sonia Sotomayor.
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