The US Supreme Court Extends Sarbanes-Oxley Whistleblower Protections to Employees of Mutual Fund Investment Advisers and Other Privately-Held Contractors to Public Companies

March 27, 2014

The Supreme Court of the United States on March 4, 2014 held that employees of a privately-held mutual fund investment adviser are protected under a whistleblower provision enacted as part of the Sarbanes-Oxley Act of 2002 (SOX). Although the SOX whistleblower provision explicitly protects employees of publicly traded companies, the Supreme Court’s ruling extended the protections afforded under the provision to employees of a privately-held investment adviser because the adviser served as a contractor to mutual funds. As Justice Sotomayor’s dissenting opinion recognized, this decision “threatens to subject private companies to a costly new front of employment litigation.”

This Dechert OnPoint discusses: (i) the SOX whistleblower provision; (ii) the Supreme Court’s decision; and (iii) the steps that privately-held contractors and subcontractors of public companies should consider in light of the decision in Lawson. Private companies should pay particular attention to this statute because it applies to a broader scope of conduct than is covered by the whistleblowing protections created by the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank).

Continue reading, "The U.S. Supreme Court Extends Sarbanes-Oxley Whistleblower Protections to Employees of Mutual Fund Investment Advisers and Other Privately-Held Contractors to Public Companies."

View reprint by the Financial Fraud Law Report.