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Court Uncovers Another Whistleblowing Pitfall

February 13, 2014

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Yesterday, the Fifth Circuit uncovered another potential pitfall.

Plaintiff was a Colombia-based, twenty-four year employee of the Colombian affiliate of a U.S.-listed company. Plaintiff claimed that after he reported an alleged accounting fraud he was passed over for pay raises and ultimately fired, in violation of Section 806 of the Sarbanes-Oxley Act. The Occupational Safety and Health Administration dismissed plaintiff’s claim and an Administrative Law Judge agreed, reasoning that application of Section 806 to the instant facts would entail an impermissible extraterritorial application of the Sarbanes-Oxley Act’s whistleblower protections. The Department of Labor’s Administrative Review Board affirmed, concluding that Section 806 limits its protection to reported violations of one of six enumerated provisions of U.S. law, and that the reported fraud here involved alleged violations of Colombian laws.

The Fifth Circuit agreed. So although plaintiff may have provided notice of his claims to his employer’s U.S. office in Houston, plaintiff could not escape the fact that the conduct about which he complained constituted alleged violations of Columbian law, not U.S. law. And the reporting of alleged violations of foreign law is not protected by Section 806 of the Sarbanes-Oxley Act. View the Fifth Circuit Opinion here.

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