Yes, complaints about potential securities law violations are protected under the whistleblower protection provision of the Sarbanes-Oxley Act. In Barrett v. e-Smart Technologies, Inc., ARB Nos. 11-088, 12-013, ALJ No. 2010-SOX- 31 (ARB Apr. 25, 2013), the respondent claimed on appeal to the ARB that the complaints were not protected because they raised concerns about future SOX violations. The ARB rejected this argument, holding that “reporting an actual violation is not required. A complainant can engage in protected activity when he reports a belief of a violation that is about to occur or is in the stages of occurring.” And in Wiest v. Lynch, 710 F.3d 121 (3d Cir. 2013), the Third Circuit held that an employee’s communications about a potential violation will constitute protected activity as long as the employee reasonably believes the violation is likely to happen.
Under many of the whistle blower laws, my clients do not need to show that they blew the whistle on an actual violation of law. Instead, they need only prove that they had a reasonable belief that what they had complained about was a violation of law. But they must show that they had an objectionably reasonable belief. That is, would a reasonable person with the same work experience and the same education who’s presented with the same information believe that there was a violation of law? What I try to hone in on early on is what did my client know when he or she blew the whistle, and would a reasonable person believe that that is a violation of law?