Dodd-Frank Whistleblower Protection Amendment Must Be Applied Retroactively, Said District Court

The U.S. District Court for the Southern District of New York has ruled that a Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 amendment to Section 806 of the Sarbanes-Oxley Act of 2002 must be applied retroactively to clarify congressional intent. The amendment specifies that public company subsidiary employees, and not just parent company employees, are protected under the whistleblower statute. The court, however, did not reach merits of the plaintiff’s claim regarding his firing and told the parties to turn in a joint letter about what steps will need to happen to get the matter ready for trial.

The lawsuit, Leshinsky v. Telvent GIT SA, involves whistleblower claims made by plaintiff Phillip Leshinsky. He contends that Telvent GIT SA (TLVT), Telvent Caseta Inc., Telvent Farradyne Inc., and a number of individuals wrongly fired him while violating Sarbanes-Oxley’s whistleblower provisions. Leshinsky, who was employed by nonpublic subsidiaries of the publicly traded Telvent GIT, contends that he was let go when he expressed opposition to using allegedly fraudulent information to secure a contract with the New York Metropolitan Transit Authority. His claims pertain to a period prior to the 2010 Dodd-Frank amendment.

The court noted that while before the Dodd-Frank amendment, Sarbanes-Oxley only protected employees who worked for publicly traded companies from retaliation when they blew the whistle, the 2010 revision does apply retroactively “as a clarification of the statute.” Leshinsky is therefore covered under Section 806.

The court said that its ruling into this matter doesn’t establish new remedies and liabilities, but rather, clarifies an already existing provision to the statute, as well as its original meaning. Considering Sarbanes-Oxley’s legislative history and policy, the court said it was “reasonable to infer” that Congress meant to protect employees belonging to every level of a public company’s corporate structure. The district court said it therefore has subject matter jurisdiction in regards to Leshinsky’s claims.

Our stockbroker fraud law firm represents investors throughout the nation. We have helped thousands of clients recoup their losses.

The Sarbanes-Oxley Act of 2002
The SOX protects whistleblowers. In addition to offering legal remedy for wrongful termination, it also provides them with employee protections. Publicly traded companies must set up audit committees that are independent and establish procedures so that employees can submit whistleblower complaints internally. While still employed, whistleblowers cannot be subject to retaliation, such as demotion, harassment, suspension, threats, pay reduction, denial of benefits, blacklisting, or reassignment to a less suitable position.

A whistleblower who is retaliated against may be entitled to different remedies, including getting rehired, payment of back pay and health benefits that were denied, compensation for other lost benefits, an apology letter, special damages, and legal fees and related costs.

Whistleblowers SOX Whistleblower Protection Shored Up With Retroactive Application of Dodd-Frank, BNA Securities Law Daily, July 11, 2011
Leshinsky v. Telvent GIT SA

The Sarbanes Oxley Act of 2002

More Blog Posts:
District Court Denies UBS Summary Judgment in Sarbanes-Oxley Whistleblower Lawsuit, Stockbroker Fraud Blog, June 7, 2012

Morgan Stanley, Citigroup, Wells Fargo, and UBS to Pay $9.1M Over Leveraged and Inverse ETFs
, Stockbroker Fraud Blog, May 3, 2012

CFTC Director Says Corporate Compliance Employees Should Have Comprehension of Dodd-Frank Whistleblower Requirements’Anti-Retaliation Provisions, Institutional Investor Securities Blog, June 14, 2012