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Supreme Court Holds SOX Whistleblower Provisions Apply To Public Company's Private Contractors and Subcontractors

April 10, 2014

The U.S. Supreme Court held, in a 6-3 decision - its first regarding a Sarbanes-Oxley (SOX) whistleblower case - that SOX's anti-retaliation provision covers employees of a public company's private contractors and subcontractors. This case was brought by two former employees of FMR LLC, a private company that contracted to advise and manage Fidelity Investment's mutual funds. As is typical in the mutual fund industry, although the mutual fund itself is a public company, it is operated and managed by employees of a separate private company. In this matter, plaintiffs, who were employees of the private company, alleged that they engaged in whistleblowing after discovering putative fraud relating to the mutual funds, and that they were thereafter retaliated against and discharged. Each plaintiff then commenced a retaliation claim against FMR (but not against the mutual funds) pursuant to SOX's whistleblower protections.

Given the Court's decision in this case, employers that are privately held companies, but which contract to provide services to public companies, must be aware that SOX's whistleblower protections now extend to their employees to the extent such employees provide services to public companies. Such whistleblowing may include providing information or assisting an investigation regarding conduct that an employee reasonably believes constitutes mail fraud, wire fraud, bank fraud, securities or commodities fraud, a violation of any U.S. Securities and Exchange Commission rule or regulation, or any other provision of federal law relating to fraud against shareholders. This engaging webcast program delved into:

  • Summary of the Supreme Court Decision in Lawson, et al. v. FMR LLC, et al., 134 S. Ct. 1158 (2014)
  • Impact of Supreme Court Decision and Expansion of SOX Whistleblower Protections
  • SEC Whistleblower Program
  • Other Whistleblower Laws
  • Elements Required to be a Whistleblower
  • Legal Definition of Retaliation
  • Compliance Recommendations for Employers

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