Whistleblower Law Blog
The Employment Law Group® Law Firm Files Amicus Brief in High Profile SOX Case
On behalf of the Government Accountability Project, the National Whistleblower Center and Taxpayers Against Fraud, the leading whistleblower advocacy organizations, The Employment Law Group® law firm filed an amicus brief in Welch v. Chao urging the Fourth Circuit to reverse the Department of Labor Administrative Review Board’s decision establishing a standard for protected conduct that is plainly contrary to the plain meaning and intent of Section 806 of SOX.
In order to protect a broad range of disclosures about potential accounting fraud, securities fraud, and violations of securities laws, Congress specifically included in the language of Section 806 a “reasonable belief” test under which a complainant can engage in protected conduct without disclosing an actual violation of law. Contrary to the plain meaning and intent of SOX, the ARB is requiring complainants to prove that they disclosed unequivocal, actual violations of securities law and is requiring complainants to demonstrate that their disclosures pertained to actual investor fraud even though Section 806 expressly protects disclosures about a violation of any SEC rule. The ARB’s standard undermines the prophylactic purpose of Section 806 depriving employers of the opportunity to receive an early warning of potential violations of Securities and Exchange Commission (“SEC”) rules that can ultimately result in shareholder fraud. For example, protecting disclosures about deficient internal accounting controls or misleading financial reporting enables employers to correct these problems before investors are harmed. Moreover, by speculating about whether Welch’s disclosures implicated securities laws, rather than consulting the pertinent SEC rules, the ARB has adopted an “I know it when I see it” standard that will chill employees from making the disclosures that Congress intended to protect and encourage. If allowed to stand, the ARB’s erroneous interpretation of protected conduct will undermine the clear intent of Congress and inevitably increase the risks of the very financial disasters that SOX was enacted to prevent.
Tagged: The Employment Law Group, P.C.