On January 26, 2011, the U.S. District Court for the District of Connecticut denied a Rule 12(b)(6) motion to dismiss a whistleblower retaliation claim brought under Section 806 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1514A) (SOX) in Barker v. UBS AG & UBS Securities LLC (Case No. 09-CV-2084). The court took a rather liberal approach in analyzing the plaintiff’s burden of alleging that she engaged in protected activity cognizable under Section 806 and that the protected activity contributed to her discharge.


Plaintiff Barker worked in UBS’s Equities Americas Division, where she was responsible for providing support to the Equities Proprietary Trading desk. In December 2006, she was assigned the task of reconciling UBS’s existing exchange seat shares with company records. During this project, Barker claims to have gone “well beyond the scope of her original assignment,” and discovered that UBS had not properly accounted for approximately $80 million realized from the sale of exchange seats.

Beginning in February 2007, and over the course of the next several months, Barker allegedly raised this issue to a number of managers. Barker claimed that the head of her group responded with retailiation, including giving her a poor performance rating in late 2007, denying her a cost-of-living increase for 2008, and passing over her for an advanced position. Notably, in November 2007, UBS issued Barker an award for her work on the exchange seat share project. In May 2008, Barker’s employment was terminated as part of a reduction-in-force affecting the entire company.

In August 2008, Barker filed a SOX whistleblower complaint with OSHA, and in September 2009, OSHA found that her alleged protected activity was not a contributing factor to her discharge. Barker appealed OSHA’s ruling within the U.S. Department of Labor’s adjudicative system, but later advised the ALJ that she preferred to proceed directly in federal district court.

The Court’s Analysis

The court analyzed whether Barker pled sufficient facts to withstand a motion to dismiss pursuant to the standards articulated in Bell Atlantic Corporation v. Twombly and Ashcroft v. Iqbal. In particular, the court focused on whether Barker sufficiently alleged that she engaged in protected activity and whether such activity contributed to her discharge.

The court began by acknowledging Barker’s need to show an objectively reasonable belief that UBS had “intentionally misrepresented, or omitted, material facts to investors which led to the possibility of financial loss.” Finding that Barker’s allegations met this requirement, the court stated: “[a]s Barker is not a lawyer, nor does she appear to have any specialized knowledge of federal securities law, it seems objectively reasonable that she would imagine unreported assets valued subsequently at over $80 million substantial enough to trigger federal scrutiny.” In reaching this conclusion, the court stated that the reasonableness of a plaintiff’s belief is “based on the knowledge available to her, taking into consideration the plaintiff’s training and circumstances.” Moreover, while the court acknowledged that certain employees “did encourage Barker in her investigation,” it stressed that Barker’s complaint included allegations as to why she nevertheless could believe that an intentional misrepresentation was occurring. In this regard, the court found compelling the fact that Barker “felt obligated to approach” the head of the Legal Compliance Division “for advice about disclosure.”

Likewise, despite UBS’s defense that the end-value of the allegedly unreported shares was not material — a general requirement of a shareholder fraud claim — the court found that a “plaintiff does not need to prove the fraud was actually material, but rather only that she held an objectively reasonable belief that it was.” In support, the court stated that while Rule 10b-5 may contain a materiality component, Section 806 does not expressly contain an independent materiality requirement. The court then stated that “[n]o matter the end value of these shares, the discrepancy could seem objectively serious enough to warrant shareholder concern.”

In addition, the court found that Barker’s complaint was sufficiently plead with regard to the issue of whether her alleged protected activity was a contributing factor in her discharge. The court applied a fairly light burden, and was not moved by the seven-month gap between Barker’s disclosures and her discharge or the reward she received for her work on the project at issue in her complaint. In addressing the temporal gap, the court noted that, in addition to the discharge, the alleged retaliation included poor performance reviews and undesirable assignments.


Although Barker reflects a loose approach to a plaintiff’s pleading obligations in SOX whistleblower retaliation litigation, it is important to recognize that this decision was issued in the context of a Rule 12(b)(6) motion to dismiss. The court’s ultimate disposition of the SOX whistleblower claim can be expected to be fact-intensive and thus provide greater direction as to the evolving “protected activity” and “contributing factor” aspects of Section 806.