The U.S. Supreme Court on Tuesday significantly expanded legal protection for corporate whistleblowers, making it clear for the first time that thousands of workers in the mutual-fund industry and other private companies are protected from retaliation for reporting fraud.
A splintered majority in Lawson v. FMR LLC found that the whistleblower-protection provision of the Sarbanes-Oxley Act of 2002 covers not only employees of publicly traded companies, but the private companies and contractors that work with them. The expansion may have the biggest impact on the mutual-fund industry because, as Justice Ruth Bader Ginsburg wrote for the majority, most public mutual-fund companies “have no employees,” instead relying on private contractors and advisers for their operations.
