The Supreme Court yesterday endorsed a broad reading of whistleblower protections in a decision that could change the way private companies approach internal compliance, the Wall Street Journal reported today. Justice Ruth Bader Ginsburg, writing for the court in a 6-3 opinion, said the whistleblower protection provisions of the 2002 Sarbanes-Oxley Act cover employees of a public company’s private contractors and subcontractors. That interpretation means that private-company employees who allege they were retaliated against for reporting certain kinds of suspected wrongdoing can potentially bring valid claims against their employer. The court’s opinion cited Sarbanes-Oxley’s intent to “ward off another Enron debacle” and empower contractors to report fraud. In this case, Jackie Lawson and Jonathan Zang sued their former employer FMR, alleging that they were retaliated against after raising concerns about suspected wrongdoing and thus count as whistleblowers under Sarbanes-Oxley. Although FMR, the parent of Fidelity Investments, is privately held, the former employees pointed out that various Fidelity mutual funds are separately registered investment companies that file reports with the Securities and Exchange Commission.
