Legal News

U.S. Supreme Court Extends the Scope of Whistleblower Law in Mutual Funds to Include Law Firms
Download PDF
1 Star2 Stars3 Stars4 Stars5 Stars (No Ratings Yet)

The U.S. Supreme Court held this Tuesday that the application of the Sarbanes-Oxley whistleblower provisions also protects privately held contractors and subcontractors of a company from retaliation. The court made it clear that the rules also apply to contractors like law firms and auditors. However, with power comes responsibility and the recent broadening of scope may also broaden the accountability of contractors in the mutual fund industry.

Law firms and auditors were specified by the way Justice Ruth Bader Ginsburg framed her question on the issue. She asked whether the whistleblower protections “shield only those employed by the public company itself, or does it shield as well employees of privately held contractors and subcontractors—for example, investment advisers, law firms, accounting enterprises—who perform work for the public company?” And according to her opinion, the answer was, “yes.”


Ginsburg opined that without such protections accountants and lawyers would be vulnerable under the provisions of the Sarbanes-Oxley rules that were created after the collapse of Enron. She mentioned that the Congress had responded after learning that employees of Enron and its accounting firm Arthur Andersen had faced retaliation for trying to report misconduct.

The justices voted 6-3, and dissenting justice Sonya Sotomayor observed that under the interpretation of the majority, “the Sarbanes-Oxley Act authorizes a babysitter to bring a federal case against his employer—a parent who happens to work at the local Walmart (a public company)—if the parent stops employing the babysitter after he expresses concern that the parent’s teenage son may have participated in an Internet purchase fraud. And it opens the door to a cause of action against a small business that contracts to clean the local Starbucks (a public company) if an employee is demoted after reporting that another nonpublic company client has mailed the cleaning company a fraudulent invoice.”

The case is Lawson v. FMR, U.S. Supreme Court, No. 12-3.

Get JD Journal in Your Mail

Subscribe to our FREE daily news alerts and get the latest updates on the most happening events in the legal, business, and celebrity world. You also get your daily dose of humor and entertainment!!


Interesting Legal Sites You May Like




Search Now

Mid-level Litigation Attorney with motions experience


Seattle office of our client seeks mid-level litigation attorney with 3-5 years of experience, inclu...

Apply Now

Environmental /Land Use Attorney with 2-3 years of experience

USA-CA-San Francisco

San Francisco office of our client seeks environmental /land use attorney with 2-3 years of experien...

Apply Now

Litigation Attorney with 2-5 years of insurance defense experience


Jacksonville office of our client seeks litigation attorney with 2-5 years of previous insurance def...

Apply Now

Attorney with 5+ years of complex litigation experience


Detroit office of our client seeks attorney with 5+ years of complex litigation experience. The cand...

Apply Now




INSURANCE DEFENSE / TRANSPORTATION LITIGATION Law firm located in North Houston seeking an associ...

Apply now

Hotline & Training Managing Attorney (IMMIGRATION)

USA-NY-New York City

Summary: The Hotline & Training Services Managing Attorney will guide, develop, and supervise the Ho...

Apply now

Legal Assistant / Paralegal


Our  law firm is currently seeking a qualified applicant to fill the position of a Legal Assist...

Apply now

Corporate Attorney


Warner Norcross & Judd, one of Michigan\'s largest and most progressive law firms, is looking f...

Apply now

Most Popular


To Top