SEC Argues that SOX Protects Third-Party Whistleblowers

In a recent amicus curiae brief, the SEC argues that the whistleblower protections of the Sarbanes-Oxley Act apply to employees of private company service providers to public companies subject to SOX. In its brief, the SEC warns that failure to cover such private company employees would expose employees of law firms, audit firms, and mutual fund investment advisers to retaliation for engaging in whistleblower activities. The SEC claims that Congress specifically intended to protect such persons, who may be in the best position to uncover wrongdoing. The SEC notes that attorneys have an “up the ladder” reporting obligation under Section 307 of SOX and should, therefore, be protected. The respondent argued that SOX only applied to public companies.