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Other Recent Significant SOX Decisions (Part II)

May 16, 2013

We continue our series of posts on recent significant SOX decisions.

The ARB Rules That An Employee’s Misappropriation Of Confidential Information May Qualify As Protected Activity Under SOX

In Vannoy v. Celanese Corp., No. 09-1118, 2011 WL 4690624 (ARB Sept. 28, 2011), the ARB ruled that a whistleblower’s misappropriation of confidential information in violation of a confidentiality agreement might still qualify as protected activity.

Vannoy was the former administrator of the company’s expense reimbursement program. He filed an internal complaint asserting that the company’s system of administering its electronic expense reimbursement and corporate credit card system, and alleged misuse of employee credit cards, posed financial risk to the company. Unbeknownst to the company, Vannoy submitted a complaint under the IRS Whistleblower Reward Program, with which he disclosed the information he had misappropriated.

Following his discharge, Vannoy filed a complaint with the OSHA under Section 806. OSHA dismissed the complaint, as did an ALJ, but the ARB ruled in Complainant’s favor. The ARB recognized the tension between employer confidentiality policies and employee whistleblower bounty programs, which preclude companies from enforcing or threatening to enforce confidentiality agreements to prevent whistleblowers from cooperating with the SEC. The ARB directed the ALJ to conduct an evidentiary hearing to determine whether the information the complainant misappropriated was the kind of “original information” Congress intended to protect and whether the method of transfer of information was protected lawful conduct within the scope of SOX.

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