On Friday, August 5, the Second Circuit issued Murray v. UBS Securities, LLC, which vacated a judgment for a former employee suing under the Sarbanes-Oxley Act of 2002 (SOX) for termination in retaliation for reporting fraud. The court held that the SOX whistleblower statute requires a plaintiff to prove that an employer took an adverse employment action with retaliatory intent, meaning an intent to discriminate against the employee because of his or her lawful whistleblowing activity.
Murray creates an appellate split amenable for Supreme Court review and in the meantime will affect how whistleblowing cases proceed in one of the most important circuits.
Background
SOX was designed with robust whistleblower protections to encourage the reporting of fraud involving public companies. One provision is Section 806 of the Act, codified at 18 U.S.C. §1514A. Generally speaking, subsection (a) prohibits companies that are registered with or file periodic reports with the Securities Exchange Commission (SEC) from discriminating against employees that lawfully provide information to or assist the SEC, Congress, or the employee’s supervisor, in an investigation regarding any SEC violation or other fraud; subsection (b) allows a person who alleges discharge or other discrimination in violation of subsection (a) to file a complaint with the Secretary of Labor and, if the Secretary does not issue a final decision within 180 days, to bring a federal court lawsuit.
Murray was filed by a...
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