Cross-Border Whistleblower Protection by Tom Hakemi


The fraud scandals that rocked the U.S. economy at the beginning of this decade have led governments to re-examine legislation to protect whistleblowers. In the last issue of this newsletter, Karl Gustafson discussed Canada's amendments to the Criminal Code. In this issue, we look at a recent New York District Court decision that arguably extends whistleblower protection to employees working

outside the U.S.

In 2002, the U.S. enacted the Sarbanes-Oxley Act, commonly referred to as SOX. Among other things, the intent was:

To protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws, and for other purposes.

To further this goal, the Act provides a private right

of action to any employee of a publicly traded company who suffers retaliation for reporting fraud. If successful, the employee may be entitled to relief that includes back pay, reinstatement and compensatory damages.

To succeed in a whistleblower claim under SOX,

the following must be shown:

* the employee engaged in "protected activity," (reporting to the U.S. government or a supervisor at their place of employment information that the employee reasonably believes relates to fraud);

* the employer knew of the protected activity;

* the employee suffered an "unfavourable personnel action," including termination, demotion or any other negative treatment that would reasonably be likely to deter other whistleblowers; and

* it can be seen that the protected activity was a contributing factor to the unfavourable action.

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Published In: Criminal Law Updates, International Trade Updates, Labor & Employment Updates, Personal Injury Updates, Securities Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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