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Supreme Court says whistleblowers at private contractors are protected under SOX

The Supreme Court decided a case on Tuesday concerning the rights of whistleblowers who are employees at private contractors doing work for public companies, ruling that the Sarbanes-Oxley protections extend to them.

Justice Ruth Bader Ginsburg’s opinion in Lawson v. FMR LLC was joined by Chief Justice John Roberts and Justices Stephen Breyer and Elena Kagan in full, and Justices Antonin Scalia and Clarence Thomas in part. Justice Sonia Sotomayor dissented, joined by Justices Anthony Kennedy and Samuel Alito.

The Court struggled with the limits of the Sarbanes-Oxley Act of 2002 (SOX) and its whistleblower protections.

Ginsburg said the law talks about retaliation against “an employee” by not just public companies, but also by a “contractor or subcontractor” of the public company.

Petitioners Jackie Lawson and Jonathan Zang were two mutual fund industry whistleblowers who sought to have the First Circuit Court’s decision in this case reversed. That court had dismissed their case, ruling that the plaintiffs could not state a claim under SOX because the whistleblower provisions protect only employees of public companies.

Lawson was employed by Fidelity Brokerage Services, LLC, a private company and subsidiary of FMR LLC, while Zang was employed by a subsidiary called FMR Co., Inc.

Justice Sotomayor, dissenting, said the whistleblower provisions of the law meant a contractor’s employee could only bring a claim of retaliation if terminated for raising concerns about fraud at the public company.

But the Supreme Court majority read SOX broadly to offer protection to a greater number of employees, ignoring assertions that doing so would open the floodgates to lawsuits outside of the statute’s purpose.

Editor’s Note: This decision does not refer to the whistleblower provisions of the Dodd-Frank Act, which was passed eight years later and did not contain the same “public company” language as SOX.


Julie DiMauro is the executive editor of the FCPA Blog and can be reached here.

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