Wednesday, May 22, 2013
This past Friday, the United State Supreme Court granted cert. in the case of Lawson v. FMR LLC. The case concerns whether the Sarbanes-Oxley Act (SOX), which protects employees of publicly traded companies from retaliation for reporting financial improprieties, also protects the employees of private contractors of those companies. In the case, two fund investment advisors blew the whistle on a publicly-traded mutual fund which contracted for their services. The First Circuit found that the fund advisors were not covered by SOX protections.
The Court had asked the U.S. Solicitor General's views on the case, and the SG recommended that the Court bypass the case in order to allow the issue to percolate among more circuit courts. The case, however, was granted.
Among the issues to be decided: whether protecting the employees of contractors is mandated under the plain meaning of SOX and whether a finding of no coverage for such employees will discourage whistleblowers from bringing financial fraud allegations to the attention of the public. It should also be an interesting case because it is one of the first to examine the whistleblower protections of SOX and will likely provide guidance on how broadly or narrowly SOX should be interpreted to protect whistleblowers in the financial services industry.