The U.S. Supreme Court recently ruled that employees alleging retaliation under the Sarbanes-Oxley Act (SOX) only have to show that their whistleblowing activity was a “contributing factor” in their employer’s adverse employment decision. SOX is a federal law that protects employees at publicly traded companies who report (internally or externally) what they reasonably believe to be criminal fraud or securities law violations.
A research strategist at a securities firm was responsible for reporting on the status of commercial mortgage-backed securities and certifying that his reports reflected his independent assessment, as required by the Securities Exchange Commission (SEC). He complained to his supervisor that the sales department pressured him to run his reports past them first and to provide more favorable reviews in order to improve sales. Two months after his first complaint, he was fired. He filed a lawsuit, claiming retaliation for his protected activity, and the trial court awarded him nearly $1 million in damages under SOX, plus an additional $1.769 million in attorney’s fees and costs. His employer appealed, asserting that the employee should have been required to prove retaliatory intent, but ultimately the Supreme Court said there is no such requirement in the SOX statute. If SOX-protected whistleblowing activity contributes in any way to an employer’s decision to take an adverse employment action against an employee, then the employer is liable unless it can show it would have taken the same action had the employee not engaged in the protected activity (Murray v. UBS Securities, LLC, US, Feb. 2024).
Tips: If your company is publicly traded, you should train supervisors and managers to forward any allegations of financial mismanagement to Human Resources for proper investigation. Negative employment actions against the complaining employee in the months or years afterward may be closely scrutinized, so you should ensure that the complaint doesn’t factor into any subsequent decisions such as downsizing, discipline, or transfer. Substantive financial compliance questions should be directed to your financial adviser and/or legal counsel specializing in SEC compliance. Your Vigilant Law Group employment attorney can advise you on appropriate documentation and evaluation of your options and risks in making employment decisions when an employee has a history of filing complaints or engaging in other protected activity.
