Retaliation Against Private Sector Employees In Financial Institutions

The Sarbanes-Oxley Act Of 2002 (SOX)

The Sarbanes–Oxley Act of 2002 (SOX) prohibits covered employers from retaliating against employees who: (1) provide information or assists in an investigation or proceeding regarding what the individual believes to be a violation of certain white collar criminal laws (i.e., mail or wire fraud, securities fraud or bank fraud), SEC rules or regulations or federal law regarding shareholder fraud; or (2) files causes to be filed, testify, participate or otherwise assist in a legal proceeding that is based on a violation of any of the foregoing laws.

Covered SOX employers include all public companies in the United States and international companies that have registered equity or debt securities with the Securities and Exchange Commission (SEC) and to the companies' respective accounting firms.

SOX Complaints must be filed with the United States Department of Labor within 90 days. Successful claims entitle an employee to back pay and attorneys' fees and costs.

Dodd-Frank Wall Street Reform And Consumer Protection Act

Unlike SOX, the Dodd-Frank Wall Street Reform and Consumer Protection Act, passed into legislation in July 2010, applies to private as well as publicly traded companies. Given the recent passage of this Act, there are few guideposts interpreting the law's scope.

A federal district judge in New York has interpreted the Act's whistleblower provision to apply when an employee is retaliated against for making disclosures: (i) under SOX; (ii) under the Securities and Exchange Act of 1934; (iii) to law enforcement about a federal offense under 18 U.S.C. § 1513(e); or (iv) under any other law, rule or regulation subject to the SEC's jurisdiction.

The statute of limitations for employees filing a Dodd-Frank claim is 6 years after the retaliatory conduct occurred or 3 years after material facts became known or should have been known by the employee. No action may be brought more than 10 years after the violation occurred.

The Act provides employees with a right to file a private lawsuit in federal district court, as opposed to first requiring exhaustion of administrative remedies. An employee receives whistleblower protection under Dodd-Frank for reporting potential fraud to the SEC, irrespective of whether the report had merit. In some instances, an employee may collect double back-pay damages for violations of the act.

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