Employees who operate overseas for United States-based companies aren't protected by a federal law that blocks retaliation against whistleblowers who bring concerns about violations of securities laws, a U.S. appeals court ruled Friday.
A three-judge panel on the U.S. Court of Appeals for the D.C. Circuit voted unanimously to reject a bid brought by former top Asia-based attorney for Morgan Stanley, Christopher Garvey.
Garvey maintained that the Sarbanes–Oxley Act of 2002, which shields workers who report on securities violations, should apply to securities fraud that happens overseas but affects U.S. markets.But the appeals court argued the law's protections do not apply to securities fraud.
The U.S. Courts of Appeals for the 1st and 2nd Circuit previously came to the same conclusion in 2006 and 2014, respectively. The D.C. Circuit's decision relied on a 2010 Supreme Court case, Morrison v. National Australia Bank, in which the justices held"when a statute gives no clear indication of an extraterritorial application, it has none."
"There is nothing in SOX to indicate that it has an extraterritorial reach covering a person like Garvey, who was employed exclusively in the overseas operation of a foreign subsidiary of a U.S.-based corporation," Edwards added.Garvey was attempting to revive claims that he was forced to resign in 2016 after spending a decade at the company when he reported alleged illegal activities that predominantly took place outside the U.S.
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