Whistleblowers are allowed to seek compensation from directors of a company, a federal judge ruled in California, broadening legal protections for whistleblowers by expanding those who can be held liable in such cases. U.S. District Court Judge Joseph Spero in the Northern District of California ruled that although it was a “close call” and few courts had taken up the issue before, the financial regulation laws Sarbanes Oxley and Dodd-Frank didn’t intend to shield directors who retaliate against an employee.
The suit that will now be litigated alleges that Bio-Rad fired its longtime general counsel for raising alerts about potential Foreign Corrupt Practices Act violations in China. The whistleblower protections contained in the Sarbanes-Oxley Act and the Dodd-Frank Act prevent that kind of retaliation. The company alleged that he could not be protected because he did not ask to be certified as a whistleblower by the SEC, and the SEC, fined Bio-Rad $55 million for FCPA violations, filed a brief supporting his position that such certification was not necessary, and the judge agreed. Now, it will move forward to consider the company’s claim that the general counsel was not fired in retaliation for whistleblowing.