Financial Services Employment Law News, Updates, and Insights for Financial Services Employers

Sarbanes-Oxley Whistleblower Coverage Expanded by Department of Labor to Private Firms Serving Publicly Traded Companies – Accountants, Lawyers, Consultants, and Advisors, Beware!

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by Frank C. Morris, Jr., and Allen B. Roberts

The U.S. Department of Labor (“DOL”) Administrative Review Board (“ARB”) has sounded an alarm that needs to be heard by accounting firms, law firms, and other consultants, advisors, and providers of services to publicly traded companies.  With its recent decision in Spinner v. David Landau & Associates, LLC, ARB Case Nos. 10-111, 10-115 (May 31, 2012), the ARB continued its expansion of whistleblower protection, holding that Sarbanes-Oxley (“SOX”) whistleblower protections extend to employees of privately held businesses that merely contract with publicly traded companies.  The ARB’s decision significantly expands the number and type of organizations whose employees it says are covered by SOX whistleblower protections.  But the result was accomplished by direct rejection of the opposite conclusion reached by the U.S. Court of Appeals for the First Circuit in its well-reasoned recent decision in Lawson v. FMR LLC, 670 F.3d 61 (1st Cir. 2012).  While this is not the first instance of contrasting administrative and judicial interpretations of the definition and reach of SOX protections, it clearly indicates the current climate in which a wide swath of employers need to reassess their compliance programs, provisions for receipt of whistleblower reports, and procedures for addressing claims and avoiding retaliation.

Read the full advisory online