Major Victory for SOX Whistleblowers

Today, the U.S. Court of Appeals for the Third Circuit issued a major precedential decision in the case of Wiest v. Tyco Electronics Corp., establishing the standards for protecting corporate whistleblowers under the Sarbanes-Oxley Act. In a 2-1 split ruling, the Court held that corporate whistleblowers who have a "reasonable belief" that securities laws are being violated are protected under the Sarbanes-Oxley Act (SOX). The Court rejected arguments raised by Tyco and the Chamber of Commerce that the SOX whistleblower law only protected employees whose disclosures "definitively and specifically" related to a "violation of a statute."

The whistleblower, Mr. Jeffrey A. Wiest, had worked at Tyco for 31 years, and was fired after rejecting expense payments that "failed to satisfy accounting standards."

The National Whistleblower Center filed an amicus brief in the case supporting Mr. Wiest, and Stephen M. Kohn, a partner in the law firm of Kohn, Kohn and Colapinto, LLP, co-argued the case before the Appeals Court on behalf of the NWC. He joined Mr. Wiest's counsel, Richard Angino, in oral argument to strongly urge the court to reject the "definitively and specifically" standard.

Mr. Kohn highlighted the importance of today's decision by stating: "This is a major victory for SOX whistleblowers. Employees performing their duties discover many corporate frauds and violations and then report concerns to their supervisor. Whistleblower laws, such as SOX, would lose their effectiveness if this common form of raising reasonable concerns was not protected."

A copy of the decision is available here.