March 7, 2014

In a decision giving private company employers cause to reassess their employee policies and protocols, on March 4, 2014 the U.S. Supreme Court issued a split decision in Lawson v. FMR LLC that broadens the potential universe of individuals able to bring a whistleblower retaliation claim under the Sarbanes-Oxley Act to individuals employed by privately held companies.

In Lawson, the whistleblower plaintiffs worked for privately held (as opposed to publicly held) companies that served as advisers to public mutual funds. In a divided and split decision, the Supreme Court ruled that both the legislative intent and the plain language of §806 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. §1514A) suggests a broad interpretation and protects employees who work for private company contractors and subcontractors of public companies from retaliation for "whistleblowing" activities. The Lawson decision underscores the need for both public and private companies to craft and document an appropriate plan of internal controls and related strategies for responding to whistleblowing complaints.

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