Employee Survival Guide® - Murray v. UBS Securities LLC: Supreme Court decision on Whistleblowing under SOX

Episode Date: December 16, 2024

Comment on the Show by Sending Mark a Text Message.This episode is part of my initiative to provide access to important court decisions  impacting employees in an easy to understand conversational format using AI.  The speakers in the episode are AI generated and frankly sound great to listen to.  Enjoy!Are whistleblowers the unsung heroes of corporate accountability? In our latest episode, we promise to unravel the transformative impact of the Supreme Court's decision in Murray v UBS Securities LLC. This pivotal ruling from February 2024 marks a seismic shift, as whistleblowers no longer need to prove retaliatory intent under the Sarbanes-Oxley Act. We guide you through the implications of this landmark change, exploring how it empowers those who speak up against corporate fraud by only requiring proof that their whistleblowing was a contributing factor to negative treatment. Companies now face the challenge of proving their actions against whistleblowers are justified and unrelated, adding a new layer of accountability.We also have an engaging conversation about the broader repercussions on corporate culture. Discover why fostering environments where ethical behavior is celebrated and whistleblowers are valued as guardians of integrity is more crucial than ever. We offer practical advice for potential whistleblowers, from documenting misconduct to seeking expert legal guidance, while acknowledging the emotional and financial hurdles they might encounter. This episode underscores the need for organizations to genuinely embrace ethical practices, moving beyond mere legal compliance, and showcases the courage required for individuals to step into the spotlight despite potential risks. Join us in this essential dialogue about reshaping corporate ethics and accountability. If you enjoyed this episode of the Employee Survival Guide please like us on Facebook, Twitter and LinkedIn. We would really appreciate if you could leave a review of this podcast on your favorite podcast player such as Apple Podcasts. Leaving a review will inform other listeners you found the content on this podcast is important in the area of employment law in the United States. For more information, please contact our employment attorneys at Carey & Associates, P.C. at 203-255-4150, www.capclaw.com.Disclaimer: For educational use only, not intended to be legal advice.

Hey, it's Mark here and welcome to the next edition of the Employee Survival Guide where I tell you, as always, what your employer does definitely not want you to know about and a lot more. Hey, everyone. Welcome back. So today, yeah, we're going to do a deep dive into whistleblower protections, specifically how it all works with corporate fraud and securities law violations. We got a request from a listener who wanted to know more about this, and I think it was

really sparked by a recent Supreme Court ruling that could have some impact on how this all plays out. Yeah, this is a big one. It's a big one. Yeah, this is a— This. It's a big one Yeah, this is a case is a game-changer really. Yeah, and the case is Murray v. UBS Securities LLC. It was just decided this year in February of 2024 Mm-hmm. So very very recent still kind of you know hot off the presses in terms of legal rulings Yeah, and the implications are massive. Yeah, the Supreme Court, we're going to make it easier for whistleblowers to win

their cases. Wow. So, that's a huge shift in the legal landscape. So let's imagine you're working for a company like UBS, a big financial institution, and you're a research strategist, just like Trevor Murray was in this case, and you're required by the SEC, the Securities and Exchange Commission, to certify that your reports are independent. You know, they're not being skewed or influenced in any way.

But then you start noticing some shady stuff going on. You know, pressure to maybe tweak your reports a little bit to help benefit the trading desk, even though it might be illegal or unethical. What do you do? Well, that's exactly what happened to Trevor Murray. He was in this very position. He felt that pressure. Yeah, he starts seeing this and he reports these concerns to his supervisor. But, you know, instead of the supervisor saying, hey, you know what, let's look into this, that sounds really serious. The supervisor basically tells him to just keep quiet.

Keep your head down. And don't rock the boat. Don't upset the trading desk. Just until he's not already kind of a red flag there. Yeah, definitely. So you're in this position where you're like, okay, I'm supposed to be independent, but I'm being pressured. I told my supervisor, my supervisor doesn't care. And to make matters worse, even though we had a recent

positive performance review, Murray is then recommended for firing by that same supervisor. So that's where we're at. Retaliation. Yeah. So this whole case goes to the Supreme Court to answer one crucial question. And that is, does a whistleblower have to prove

that their employer had retaliatory intent in order to win a case under SOX? Interesting. SOX being the Sarbanes-Oxley Act that was passed in 2002 after the Enron Scandal. Of course, to protect whistleblowers. To protect whistleblowers from this kind of thing. Exactly.

And the Second Circuit Court, where Murray filed his suit originally, said yes, you have to prove retaliatory intent. So like they were out to get you. Like they were out to get you, like they had this- Yeah, almost a vendetta. A vendetta against you.

But other courts around the country disagree and said, no, you don't necessarily have to show that. So there was this kind of legal tug of war going on and it landed right in the Supreme Court's lap. So the Supreme Court had to kind of clear this up. Exactly. Had to make a decision. Yeah.

So this retaliatory intent thing was a big deal. It was a big burden for whistleblowers for sure. It was a huge burden. Yeah. What did the Supreme Court decide? So they actually rejected the retaliatory intent requirement. Wow.

Which is huge. Huge. That's a major win for whistleblowers. So they're basically saying you don't have to prove that your employer was like, I'm going to get you. You don't have to prove that they were like twirling their mustache. Right. Exactly.

Being evil. Yeah. So what was their reasoning behind that? Well, they focused on the language of SOX, the Sarbanes-Oxley Act. OK. And SOX focuses on discrimination against whistleblowers. And to the court, that means any unfair treatment, because someone blew the whistle.

Not necessarily because the company was like, we hate this person and we want to punish them. I see. That's a really interesting distinction. It's like, it doesn't have to be personal. It's just that they treated you differently because you blew the whistle. Exactly.

How does this affect someone like Murray or anyone else thinking about blowing the whistle? Well, it means that whistleblowers have an easier path now. Instead of proving this, like ill will, they simply have to show that their whistleblowing was a contributing factor. Ooh, contributing factor, that's a new term.

So what does contributing factor mean? So it means any action that like helped cause or bring about the negative outcome. So if you report accounting fraud, and then you're demoted, even if the company's like, well, we demoted you because of poor performance, they would have to prove that those performance issues were legitimate and not related to your whistleblowing.

Exactly. Oh, that's interesting. It shifts the burden of proof to the company. So it's not just enough for them to just be like, oh yeah, well, you know, they were doing a bad job. They can't just make vague claims. They have to actually have the receipts to prove it. Yeah.

Exactly. Back it up. Fascinating. But I'm wondering, doesn't this make companies super vulnerable to lawsuits, even if the claims are bogus? That's a good question. Couldn't someone just cry whistleblower anytime something goes wrong? That's a valid concern.

Yeah, people are thinking about that. But the court addressed that. They said, look, companies can still defend themselves. If they can prove they would have taken the same action, like the demotion or the firing, for totally legitimate reasons that have nothing to do with the whistleblowing. Okay. They're in the clear. So like, let's say a company can show that they were already planning to lay off people

before any whistleblowing happened and the whistleblower's position just happened to be on that list. Yeah, that's a good example. They could potentially use that. They could use that. As a defense. Absolutely. So it's not like a free-for-all for people to just sue over anything. Yeah, that's a good example. They could potentially use that they could use that as a defense absolutely So it's not like a free-for-all for people to just sue over anything. It's not a blank check, right? Exactly. There still needs to be that connection between there has to be a connection what they reported

Yeah, what happened to them exactly? It's not about giving people an excuse to sue over like every little workplace thing, right? Just cuz you didn't get the promotion you wanted or something like that. Right. Exactly. It has to be related to something that you reported. Yeah. Okay. So this is where it starts to get really interesting. So if you were running a company and you knew this ruling was out there,

wouldn't you start thinking twice about how you deal with whistleblowers? Oh, for sure. I mean, could this actually shift corporate culture as a whole? That's a great question, I think. You know, the Supreme Court didn't just decide this case in a vacuum. They specifically said that. SOX was designed to encourage whistleblowing, especially in fields like finance, where the public has so much at stake. So they're really looking at the intent of Congress.

Yeah, the legislative intent. When they pass this law, they're like, look, Congress wanted to protect these people for a reason. We're going to make sure that happens. So how could this decision potentially impact how companies operate on a day-to-day basis? Well, if companies realize they could be held liable, even if they don't have any ill will toward the whistleblower, they're going to be much more cautious. They've got to think long and hard about how they respond to anyone raising concerns.

It's not just a matter of... It's not just he said, she said anymore. Right, exactly. You can't just brush it off. So It's not enough to just have a generic hotline Well, or some vague policy buried in the employee handbook, right? You've really got to create a system that protects these people Yeah, so what would that look like? Well for starters the internal reporting mechanisms need a serious overhaul that They need to be independent, confidential, easily accessible. Make sure employees know exactly how to report concerns that their reports will be taken seriously.

And that their identity will be protected. Because what's the point of having a hotline if nobody picks up the phone? Exactly. Or worse, if the person who picks up the phone is friends with the person you're reporting. Right. That just completely undermines the whole system. Exactly. So you've got to have trust in the system.

It's about trust. It's about making sure employees feel confident that if they report something, it's going to be lurked into. It's not going to be swept under the rug. And that appropriate action will be taken. Exactly. So are we talking about like a fundamental shift in

corporate culture here? Yeah, I think so. Moving away from this don't ask, don't tell. Right. That allowed like Enron to happen and all these other scandals. It's about creating a culture of accountability. Yeah, where everyone understands that ethical conduct is not optional. Yeah. It's a must have. It's essential. And that speaking up when you see something wrong is not just allowed, it's encouraged.

So this ruling could be a powerful catalyst. Yeah, absolutely. For that kind of change and empowers employees to speak up, knowing that they have a stronger legal foundation to stand on. Even if they can't prove their employer was, like, out to get them personally. It really levels the playing field. It levels the players. It shifts that burden of proof to the employer.

So in a way, it's kind of a deterrent. It can be a deterrent for sure. If companies know that they're more likely to get caught and face real consequences, they might think twice before engaging in shady practices in the first place. It's like an ounce of prevention is worth a pound of cure. Exactly, it's better to just do things right from the get go.

It encourages a culture of compliance from the beginning. And who wants to be the next Enron? Oh, nobody wants to be the next Enron. Right. I mean, the reputational damage alone is devastating these days. Especially in today's world. Especially with social media and everything else. Things spread like wildfire.

It's not just legal compliance anymore. It's about maintaining public trust. Yeah. Building trust with your customers, your investors, the public. So this Supreme court ruling goes way beyond just a legal case. Absolutely. It's about, it touches on corporate culture, ethical leadership, corporate culture, ethical leadership, accountability, transparency.

Culture, Ethical Leadership. Public culture, ethical leadership. Accountability, transparency. It's about creating a system where doing the right thing is the norm, not the exception. Yeah. But what about the whistleblowers themselves? That's a good question. What advice would you give to someone considering coming

forward with sensitive information. Let's take a quick break. It's Mark, and we have a new product for you. It's called the Employee Survival Guide or Employeesurvival.com. And it's a site that you can obtain PDF products that I created myself. I was spending too many hours, way too many, researching and writing about, for example, the performance improvement plan or beating them.

And the second one about negotiating severance negotiation agreements, two of the most important topics that we see in terms of the web traffic and podcast traffic we have. So check out Employeesurvival.com and see if this can try to help you and you don't need an attorney to use it. Thank you. That's a big one. Well first and foremost document everything. Document everything. Keep meticulous records of any instances of misconduct you witness including dates, times, names of individuals involved. If it's not documented it didn't happen. Exactly. Right. And this documentation should be kept separate from any company-owned devices.

Ooh, that's a good point. Or systems, you know, who might be monitoring those. So don't leave a trail. That can be easily accessed. Keep it separate. Yeah, keep it secure. What else? It's also vital to understand the relevant whistleblower protection laws.

These laws can be complex and vary, depending on the industry and jurisdiction. So seeking legal advice from an attorney who specializes in this area is essential. So do your research, document everything, and get legal counsel. Get legal counsel. That's advice, but let's be real.

Blowing the whistle can be a long and arduous process. It can be. Right. It can really take a toll emotionally, professionally, even financially. Yeah. It's not for the faint of heart. It's not for the faint of heart. It takes a lot of courage to do this. It does. And it's important to acknowledge the courage it takes to step forward. Knowing the risks involved. Whistleblowers often face immense pressure, personal sacrifice.

Sometimes even retaliation. Retaliation. Despite these laws. Yeah. They're kind of unsung heroes in a way. They are. They often benefit society as a whole. Yeah. I mean, think about the impact of whistleblowers in exposing fraud, corruption, unsafe practices. They contribute to a more transparent and accountable world. Exactly.

So to all the whistleblowers out there, thank you. Thank you for your bravery. Thank you for your commitment to doing the right thing, even when it's hard. Even when it's really hard. And making a difference. And the legal landscape is evolving to provide them stronger protections. Yeah, it seems like we are moving in the right direction. It's a step in the right direction.

But I can't help but wonder, will this ruling actually change how companies behave in the long run? That's the million dollar question. Or will they just find loopholes and ways to minimize their liability without really embracing the spirit of protecting these people? What do you think? I think time will tell.

But one thing is certain. This ruling has put a spotlight on whistleblower protections and forced companies to take a hard look in the mirror. Yeah. They can't ignore this issue anymore. Right. It's like they say, sunlight is the best disinfectant. By bringing this out in the open, the Supreme Court has created

an opportunity for real change, both in how companies handle internal reporting and how they treat employees who speak up. It'll be interesting to see how this all plays out. So it's a chance for companies to step up. Right. To really demonstrate their commitment, not just with their words, but with their actions. The concrete actions. And it's a chance for all of us, employees, employers, society as a whole, to create a culture

where whistleblowers aren't seen as troublemakers or threats, but as valuable assets who can help keep organizations honest and accountable. We need to move away from that fear-based culture where people are afraid to speak up for fear of losing their jobs or being ostracized. Right, imagine a workplace where ethical behavior is so ingrained that whistleblowing becomes almost unnecessary

because issues are addressed openly and transparently from the start. Yeah. What a great vision. Yeah. So we've covered a lot of ground today. We've found. From the specifics of the Murray case and this new contributing factor standard to the broader implications for corporate culture and what companies might need to do to adapt. It's been a fascinating conversation. It has, and hopefully you feel a little bit more equipped to understand how this ruling could impact you

and your own workplace. And if you're interested in learning more, there are tons of resources available. Organizations like the National Whistleblower Center and the Government Accountability Project are dedicated to protecting whistleblowers and advocating for stronger legal protection. They've got websites. They've got amazing websites packed with information.

Packed with information. They even offer legal guidance. Knowledge is power. Knowledge is power, especially in a situation like this. For sure. The more you understand your rights and the legal landscape, the better prepared you'll be to navigate these complex issues. And if you find yourself in a situation where you're thinking

about blowing the whistle, remember those key takeaways we talked about? Document everything meticulously. Name those records safe and secure and get legal advice. Get legal advice. From an expert. From an expert. Those are your best tools for protecting yourself. Absolutely. And never underestimate the power of speaking truth to power. Yeah. Whistleblowers play a vital role in holding powerful entities accountable and ensuring a just in holding powerful entities accountable and ensuring a just and equitable society. Well said. So on that note, it's time to wrap up this deep dive.

This deep dive. Keep asking those tough questions, keep learning, and keep pushing for a better tomorrow. See you on the next deep dive. Yeah. Yeah, it really is. Will this be a real cultural shift? Or are companies

just gonna, like, put a band-aid on it? Yeah. To avoid lawsuits and not really, like, embrace the spirit of the thing? Right, because you can imagine companies doing that. Yeah. Like, ticking all the boxes legally, but not really changing how they operate. Exactly. So yeah, time will tell. But at least now there's a big spotlight on this whole issue. Right. That's the key thing. The court has said this is important. It's on the radar. We're not going to let this go. Companies have to pay attention. Yeah.

It's not going to be. Business as usual. And it's not just about avoiding legal trouble. It's about doing the right thing. Right. Creating an ethical workplace. And nobody wants to be the next Enron. Exactly.

The reputational damage is just too great these days. Oh, absolutely. Especially in today's world, where news travels so fast and consumers have a lot of choices. Consumers are more savvy than ever before. They can do their research. They can see what a company's values are. They can see what companies are actually doing. And choose accordingly. And vote with their wallets.

Yeah, absolutely. So this case, it really goes beyond just this legal issue. Right, it's much bigger than that. It's about like it's about ethics, it's about culture, sure of corporation, it's about leadership, it's about leaders, accountability, transparency, all of those things. It's a much bigger conversation. It's about how we want businesses to operate. Yeah, exactly. In our society.

Yep, so this is a step in the right direction. Hopefully a big step. Hopefully a big step. There's still a lot of work to do. There's always more to do. Yeah. To create that kind of ethical, transparent workplace that we're talking about.

Yeah, so what about like, those whistleblowers out there? Like what advice would you give to someone who's thinking about coming forward with this kind of sensitive information? That's a good question. Because it's a big decision. It is. And there's a lot to consider. Yeah.

So first and foremost, document everything. Keep meticulous records of any instances of misconduct that you witness, including dates, times, names of individuals involved. If it's not documented, it didn't happen. Exactly. That's the rule. Right. Get those receipts. And keep that documentation separate from any company-owned devices or systems. Yeah. Good point. Don't leave a trail. That can be easily...

Because you never know who might be monitoring those. Accessed, yeah, keep it safe. Exactly, keep it secure. What else? It's also really important to understand those whistleblower protection laws, because those laws can be complex, they can vary depending on the industry, the jurisdiction.

So it's essential to get legal advice from an attorney who specializes in this area. So... Do your research. Do your research. Document everything. Document. Get legal counsel. Absolutely.

Sounds like good advice. It is. But blowing the whistle can be a really tough process. It can be. It can be very difficult. Right. It can take a toll. Emotionally, professionally, financially.

Yeah. It's not for everyone. Not for the faint of heart. It's important to acknowledge the courage that it takes to step forward, knowing that there are risks involved. Yeah, and whistleblowers often face immense pressure. Yeah. Personal sacrifice.

And sometimes even retaliation. Yeah, despite. Even. With laws in place, it can still happen. It can still happen. They're really taking a big risk They are putting themselves out there They're putting their necks on the line and they're often doing it for the benefit. They are society They often benefit society as a whole right? I mean think about

the whistleblowers who've exposed Fraud and corruption. Mm-, unsafe practices. They're contributing to a more transparent and accountable world. They're making the world a better place. Yeah. So to all the whistleblowers out there, thank you. Thank you for your bravery.

Thank you. And your commitment to doing what's really- For doing the right thing, even when it's hard. Even when it's really hard. You guys are heroes. You're making a difference. Yeah, and it seems like the legal landscape is finally catching up.

It is evolving. It's getting better. It's evolving. It's getting better. And providing stronger protections for those who speak truth to power. Which is great to see. Absolutely.

A step in the right direction. It is a step in the right direction. But I still wonder, will this ruling actually change the way companies behave in the long run? Yeah, that's the big question, right? Or will they just find loopholes and ways to minimize their liability without really embracing the spirit of this whole, you know, protection. The protection of whistleblowers. What do you think? It's tough to say for sure.

I mean, it's like, are they going to really change their ways? Right. Or is this just like window dressing? Yeah, exactly. Like putting on a good show to avoid lawsuits, but behind the scenes. But not really changing how they do business. Exactly. So I guess we'll have to wait and see. But, you know, at least this ruling has, like, started a conversation. Right. It's brought it out into the open. And it's forced companies to at least acknowledge the issue.

Yeah. They can't just sweep it under the rug anymore. Exactly. It's, like you said before, sunlight is the best disinfectant. It really is. So maybe, just maybe, this could lead to some real change. I hope so. There's a chance for companies to show that they're serious about ethics. Yeah, not just talking the talk, but walking the walk. And it's a chance for all of us, you know, employees, employers, everyone, to create a culture where whistleblowers are seen as... As assets, not enemies. Yeah, exactly. Like, they're helping the company, they're helping society. Right, they're the good guys. Instead, exactly. Like they're helping the company, they're helping society.

Right, they're the good guys. Instead of being treated like they're causing trouble. Right, like they're rocking the boat. We need to move away from that. Yeah. Imagine a workplace where ethical behavior is just automatic. Yeah, it's just part of the DNA of the company. So you don't even need whistleblowers because problems are addressed head on.

Right from the start. That's the ideal, right? That's the goal. Well, I think we've given our listeners a lot to think about today. I hope so. We've talked about the Murray case, this new contributing factor standard,

what it all means for corporate culture. And most importantly, what you can do if you find yourself in a situation like this. Exactly, remember, document everything, And most importantly, what you can do if you find yourself in a situation like this. Exactly. Remember, document everything, keep those records safe, and get legal advice from a specialist. Those are your best tools to protect yourself. Absolutely.

And never be afraid to speak up for what's right. The world needs more whistleblowers, not fewer. Well said. So on that note, I think it's time to wrap up this deep dive. Thanks for having me. It's been a great conversation. Thanks for joining us. And to all our listeners, keep asking those tough questions, keep learning, and keep pushing

for a better world. We'll see you next time. If you like the Employee Survival Guide, I'd really encourage you to leave a review. We try really hard to produce information to you that's informative, that's timely, that you can actually use and solve problems on your own and at your employment. So if you like to leave a review anywhere you listen to our podcast, please do so. And leave five stars because anything less than five is really not as good, right? I'll keep it up. I'll keep up the standards up. I'll keep the information flowing at you. If you'd like to send me an email and ask me a question, I'll actually review it and

post it on there. You can send it to mcaru at capclaw.com.