Leaking information to the media about bad financial controls is not protected by SOX whistleblower retaliation clause.
Nicholas P. Tides and Matthew C. Neumann were working as “Audit IT SOX auditors” at The Boeing Company. They made several complaints about auditing deficiencies to their supervisors. They claimed “that Boeing’s auditing culture was unethical and that the work environment was hostile to those who sought change.”
So they took their story to Andrea James, a reporter from the Seattle Post-Intelligencer, providing her with information and documents.
Boeing ended up firing Tides and Neumann. They sued claiming they were wrongly fired as whistleblowers and were protected under Section 806 of Sarbanes-Oxley.
The court pointed out that 18 USC § 1514A(a)(1) states that the protection exists when
the information or assistance is provided to or the investigation is conducted by—
(A) a Federal regulatory or law enforcement agency;
(B) any Member of Congress or any committee of Congress; or
(C) a person with supervisory authority over the employee (or such other person working for the employer who has the authority to investigate, discover, or terminate misconduct)
None of these three cover a reporter or media outlet, so no protection to the whistleblower.
Sources:
- Order in the case of Tides v. Boeing – Hosted on JD Supra
- Section 806 of SOX, 18 USC § 1514A(a)(1)
- Corporate and Financial Weekly Digest – February 12, 2010 by Katten Muchin Rosenman LLP
- Fired employee sues Boeing in whistle-blower case By Andrea James in the Seattle Post Intelligencer ( The reporter who wrote this story is named in the lawsuit as the reporter who talked with Nicholas Tides.)
- Court says leaking info on bad controls to media is not protected by SOX whistleblower retaliation clause by Matt Kelly
Disclosure: I own some Boeing stock.
So let’s say our whistleblowers CC’ed a member of Congress at the same time they emailed documents to the Seattle Post-Intelligencer– would that have provided protection? In other words, in an era of simultaneous multiple disclosures, could Section 806 protect you for one disclosure but not another?
Disclosure: I am a reporter. I also don’t like Seattle.
Matt –
I think it only takes one bad guest to ruin this party. You can get fired for violating the media disclosure policy, but not for the Congressional disclosure. That’s still fired.
If they gave it to the Congressman who then leaked it to the press? I don’t know.
The same is true with Attorney-Client privilege. If you CC your auditors on a letter/email to your attorney, that message is no longer subject to privilege. https://www.compliancebuilding.com/2009/01/20/draft-sec-filings-can-be-protected-from-discovery/