On May 21st, the U.S. District Court for the Southern District of New York joined four other district courts in holding that the SEC's rules implementing the Sarbanes-Oxley whistleblower protection provisions are entitled to deference. Plaintiff, a mortgage-backed securities analyst, alleges he was fired in violation of the Sarbanes-Oxley Act when he told supervisors that he was being pressured to produce misleading research reports. His fianncial instituion employer claimed that plaintiff failed to state a claim under the Act because he complained only to his supervisors, not to the SEC, as required by the language of the Act. The Court, however, disagreed noting that the Act provided the SEC with the authority to write implementing rules. Those rules extend the anti-retaliatory protections to those who report their concerns to someone other than the SEC. Finding that the SEC's rules are entitled to deference, the Court holds plaintiff stated a claim and denies the motion to dismiss. Murray v. financial institution.
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Court accords deference to SEC whistleblower rules
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