A federal judge in Massachusetts has fired a dramatic new volley in the battles over who can file whistleblower retaliation claims under Section 806 of the Sarbanes-Oxley Act, ruling that two employees of a private contractor to Fidelity Investments can pursue retaliation complaints against Fidelity, because the business ultimately serves investors in public companies.
The decision, handed down March 31 in federal district court, is a sharp departure from previous rulings on the scope of Section 806. Until now, federal courts and the Labor Department’s Administrative Review Board (which also hears Section 806 complaints) have consistently said that the whistleblower protections of SOX only apply to employees of public companies. Judge Douglas Woodlock, however, ruled that for the intent of SOX protections to be met, those protections must extend to employees of contractors and sub-contractors that work for protected companies, even if those contractors are privately held.
