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Court Broadens SOX Whistleblower Scope

Martinek Paul J. | April 10, 2007

In one of the first whistleblower suits under the Sarbanes-Oxley Act to reach court, a federal judge in New York has raised some eyebrows by allowing the plaintiff to proceed to trial—and striking some potentially ominous tones for corporate defendants.

Whistleblower lawsuits are still largely an unexplored part of Sarbanes-Oxley. The law clearly allows protections for employees who report financial fraud and then suffer retaliation from the company, but no precise definitions have been determined yet for what sorts of fraud or retaliation might invoke those protections. Critics say workers can file all manner of frivolous or unrelated complaints and then claim SOX protection, when they might legitimately be nuisance employees who should be disciplined.

The latest case, Mahony v. Keyspan Corp., involves a former media relations executive at Keyspan, a $7.2 billion electric utility....

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