RELEASE: TAF Coalition Files Amicus Curiae Brief Encouraging the Supreme Court to Protect Sarbanes-Oxley Whistleblowers

The amicus curiae brief encourages the Supreme Court to protect whistleblowers.

WASHINGTON, DC — On July 5, 2023, The Anti-Fraud Coalition (TAF Coalition) submitted an amicus curiae brief to the Supreme Court in Trevor Murray v. UBS Securities LLC, and UBS AG, a case that could have serious implications for future whistleblowers. TAF Coalition’s brief focused on what a whistleblower has to show in order to prove that they have been retaliated against under the anti-retaliation provisions of the Sarbanes-Oxley Act (SOX). The brief was drafted with Clayton Wire, from member firm Ogborn Mihm, with assistance filing from Sam Buffone from member firm Black & Buffone. The brief was joined by The National Employment Lawyers Association (NELA) and Better Markets, Inc.

The SOX anti-retaliation provisions prohibit publicly traded companies from retaliating against their employees for engaging in protected activity, such as reporting violations for federal securities laws, directing that an employer not “‘discriminate against an employee . . . because of’ whistleblowing.” The statute also lays out the burdens of proof associated with proving a whistleblower’s retaliation claims. First, the plaintiff must show that protected activity “was a contributing factor in the unfavorable personnel action alleged in the complaint.” The burden then shifts to the employer to “demonstrate by clear and convincing evidence that the employer would have taken the same unfavorable personnel action in the absence of that behavior” had the employee not engaged in protected activity.

In this case, the whistleblower Trevor Murray brought a SOX retaliation case against his employer, UBS Securities, alleging that he was fired after reporting fraudulent attempts to manipulate reports that he was tasked with creating to provide risk assessments related to mortgage-backed securities in the wake of the Great Recession, caused in large part by the collapse of the mortgage-backed securities markets. A jury ruled in his favor, finding that Murray had proved that he engaged in protected activity, that UBS knew about the protected activity, that he had been fired, and that his protected activity was a contributing factor in the termination. UBS appealed the United States Court of Appeals for the Second Circuit.

The Second Circuit reversed the jury’s decision, finding that while Murray had proven that his protected activity was a “contributing factor” to his termination, that was insufficient to find liability, because he was also required to prove “retaliatory intent.” Ignoring the text of the statute laying out the burdens of proof, the court found that the language prohibiting employers from “discriminate…because of” required a whistleblower to prove the employer’s intent. Murray appealed, and the United States Supreme Court granted Murray’s writ of certiorari and agree to hear the case.

TAF Coalition’s amicus brief in support of Murray explains the proper interpretation of the text of the SOX anti-retaliation provisions and the intent of Congress in passing SOX and in framing it the way that it did. The brief also emphasizes the vital importance of whistleblowers to the protection of the financial markets and the significant risk they take in coming forward. The brief explains that placing additional, unintended burdens on whistleblowers would chill future whistleblowers from coming forward and undermine the purpose of the anti-retaliation provisions.

“Brave whistleblowers take on substantial personal and financial risk to shine a light on unscrupulous companies engaged in illegal activity that could not only harm individual investors, but potentially cause broader harm to the financial markets,” explained Jacklyn DeMar, Director of Legal Education for TAF Coalition. “They deserve the protection that the plain language of the statute requires and that Congress clearly intended. Adding burdens to proving their claims that are not contemplated by the anti-retaliation provisions of SOX will prevent future whistleblowers from coming forward and massive financial frauds will go undetected.”

Clayton Wire, the primary author of TAF Coalition’s amicus brief, explained that “[b]attling the corporate code of silence that hides illegal conduct is why Congress enacted the Sarbanes-Oxley Act’s whistleblower protections. The clear intent of Congress in choosing a whistleblower friendly burden of proof was to encourage insiders to come forward and help prevent the next Enron. The Supreme Court must uphold the SOX retaliation protections, not undermine them by imposing new requirements on victims of retaliation that are contrary to the statute Congress enacted.”   

For more information on this topic, please contact James King at [email protected].