Court continue to apply the “reasonable belief” test to SOX retaliation claims. Therefore, easy dismissals in SOX retaliation cases for lack of protected activity is likely at an end.
This article by TELG principal Tom Harrington and TELG managing principal R. Scott Oswald was published by The Corporate Counselor on November 3, 2014. The full article is available as a PDF on our site.
With All Due Deference: Following the ARB’s Lead in Defining Protected Activity under SOX
In the courtroom, a business transaction, or on a ball field, a loss can also be
a victory. Such is the case for employees in the matter of Nielsen v. AECOM
Technology, decided by the Second Circuit Court of Appeals in August 2014.
Employment law practitioners eagerly awaited the court’s decision on the appropriate
standard for evaluating whether a plaintiff engaged in protected activity
under the Sarbanes-Oxley Act’s (SOX) whistleblower protection provisions. The
court found against the plaintiff, an employee of AECOM Technology, but in doing
so, became the latest circuit to hold that employees need not “definitively and
specifically” identify a particular securities law or category of fraud in order to be
protected from retaliation. This is a significant victory for employees.
In this article, we provide a brief history of how the “definitively and specifically”
standard came to be, how the tide began to turn against the application of
this standard, and what this means for practitioners and employees who blow the
whistle on securities fraud.