Court broadens whistleblower protection under SOX

Employee complaints don't need to relate to shareholder fraud to be protected by the law

In May 2006, Andrea Brown learned a juicy secret about her boss.

Brown, an employee at Lockheed Martin Corp., found out that her supervisor, Wendy Owen, was misusing the corporate pen-pal program, which was meant to boost the morale of soldiers deployed in Iraq. Owen was having multiple sexual affairs with soldiers she had met through the program. She was also using company funds to pay for transportation, hotels and gifts for her lovers, and she was passing these expenses on to Lockheed’s clients.

“The court held that the current board correctly interpreted the statute consistent with the unambiguous language and intent of Congress to protect employees who report conduct that specifically relates to any of the enumerated federal fraud statutes,” says Mary Pivec, a partner at Williams Mullen.

According to James McQuade, of counsel at Orrick, the 10th Circuit’s broad interpretation is important because it “could have the effect of continuing to expand the scope of protected activity under SOX, which, in turn, could lead to an increase in SOX claims.”

Ashley Post

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