The Supreme Court agreed on May 1 to look at a federal investor protection law after a Wall Street whistleblower claimed his former employer fired him for refusing to paint an unjustifiably rosy picture of market outlooks.
The law concerned is the federal Sarbanes-Oxley Act of 2002 which was approved by Congress after accounting fraud led to the high-profile collapse of WorldCom Inc., Tyco International, and Enron Corp.
The statute added new criminal penalties for running afoul of securities laws and ushered in strict new rules for accountants, auditors, and corporate officers, along with more stringent recordkeeping requirements, according to Investopedia.
Sarbanes-Oxley also provides that employers are not allowed to discriminate against an employee because the individual reported financial improprieties.
The court agreed to move forward with the case of Murray v. UBS Securities LLC, court file 22-660, in an unsigned order. As is its custom when granting petitions, the court failed to explain its decision. No justices dissented from the order.
Petitioner Trevor Murray wants to resurrect a $900,000 jury verdict he won against respondent UBS after his employment was terminated, allegedly for declining to skew his research reports to complement the company’s business strategies.
UBS claimed Murray was let go as part of a larger series of layoffs related to financial problems it was experiencing at the time, including a $2 billion loss months before he was fired that was attributed to a rogue trader.
The U.S. Court of Appeals for the 2nd Circuit overturned the verdict, finding that under Sarbanes-Oxley Murray had to prove that UBS deliberately retaliated against him. Other federal courts of appeal have ruled that employees do not have to prove an employer’s retaliatory intent.
“The whistleblower protections of the Sarbanes-Oxley Act … are critical to the integrity of the national economy,” according to the petition.
The document also states that one in every two Americans invests in public companies whether directly or through pension and retirement plans and that in the past six years employees have filed more than 850 Sarbanes-Oxley whistleblower complaints with the U.S. Department of Labor.
“Such lawsuits cannot serve their intended deterrent purpose if [Sarbanes-Oxley] claims are too hard to prove,” it states.
Murray’s attorney, Robert Herbst of New York, praised the Supreme Court for granting his client’s petition.
“Trevor Murray and his legal team are heartened by the Supreme Court’s grant of certiorari today,” Herbst told The Epoch Times by email.
“The Second Circuit’s decision flies in the face of the text of the burden-shifting framework established by Congress decades ago to govern how Sarbanes-Oxley and other whistleblower trials are conducted,” he said.
“We look forward to arguing this case on the merits, and advancing our contention that the Second Circuit’s decision should be reversed.”
Attorney Eugene Scalia of Gibson, Dunn, and Crutcher, who is a son of the late Supreme Court Justice Antonin Scalia, is representing UBS. The Epoch Times reached out to Scalia for comment but had not received a reply as of press time.
“Further review is not warranted in this case,” the brief stated.
Among the reasons why the court should reject the case is that Murray “substantially over-states the alleged” conflict between the federal courts of appeal.
In addition, “the unambiguous, ordinary meaning of [the law’s] text requires proof of retaliatory intent,” Scalia wrote.
The case is expected to be heard in the Supreme Court’s new term that begins in October.
