Protected Activity

A wide range of employee conduct falls under the scope of the Sarbanes-Oxley (SOX) whistleblower protections.

An employee will be protected by the SOX whistleblower retaliation law if he or she either: (1) provides information; (2) causes information to be provided; or (3) assists in an investigation involving conduct that he or she reasonably believes constitutes:

  • Shareholder fraud
  • Bank fraud
  • Mail fraud
  • Wire, radio and TV fraud
  • Securities fraud, or that violates any rule or regulation of the Securities and Exchange Commission (SEC).

In order to be covered by SOX whistleblower protections, the employee must provide information to a person with supervisory authority over him or her, a federal regulatory or law enforcement agency, or Congress.

Significantly, a SOX whistleblower need not specifically mention the word "fraud" to be protected. Further, an employee who suffers retaliation may have a claim even if he or she informed the employer about violations of which the employer was already aware, or makes a complaint about a violation that has not yet, but is about to be committed.

An important development in Sarbanes-Oxley whistleblower law in 2011 is an Administrative Review Board (ARB) decision holding that, in order to establish that he or she has engaged in protected activity under the statute, an employee does not have to show that the employer actually violated the Sarbanes-Oxley Act. Instead, the employee only has to show that he or she had a "reasonable belief" that the complained-of conduct was a violation.

This is a significant advance for Sarbanes-Oxley whistleblowers and their attorneys, because historically employers often would tenaciously dispute--and sometimes prevail--on the issue of whether a SOX violation had actually occurred. The "reasonable belief" standard lessens the employee's burden on this issue, concomitantly having the effect of encouraging SOX whistleblowing activity.

Even the third-party reporting of fraud by a person has been determined to constitute protected SOX activity. For example, one case held that a FedEx courier who reported concerns to law enforcement regarding suspected mail fraud by a package recipient, and then was suspended by FedEx in retaliation, was covered by the law.

In recent years, courts and administrative officials have widened the scope of the Sarbanes-Oxley whistleblower provisions in order to protect a wider scope of whistleblowing activity. The clear thrust of the law is to prevent fraud and protect employees and other persons who report it.

If you are a New York or New Jersey resident, or were employed at a company located in New York or New Jersey, and have suffered retaliation for engaging in SOX whistleblowing activity, you can contact Attorney Eric Dinnocenzo at (212) 933-1675 for a free consultation.