Category Archives: Sarelson Law Firm Matters

The ARB issued a major, en banc and unanimous ruling on subsidiary liability under SOX. Sarbanes-Oxley was enacted in 2002 and includes an anti-retaliation provision to protect employees who report financial misconduct about their publicly traded employers. But for many years the courts have wrestled with whether an employee has to be employed directly by the publicly traded company, or whether an employee of a subsidiary or an affiliate of a publicly traded company is also protected. (Intuitively the answer is yes because otherwise the publicly traded company could structure itself as a holding company and completely avoid SOX liability). Complicating the issue was the Dodd-Frank Act, which amended SOX to expressly cover subsidiaries. So, did SOX in 2002 cover subsidiaries, or were subsidiaries in the clear until the passage of Dodd-Frank?
Everybody is covered. The ARB issued a thoughtful opinion and correctly held that Dodd-Frank did not “change” the law, but merely “clarified” the law. Congress originally intended in 2002 for subsidiaries and affiliates to be covered by the anti-retaliation provision of SOX. But since SOX did not expressly indicate so, some courts had ruled that subsidiaries are not covered. Dodd-Frank was enacted to clarify that Congress wanted subsidiaries to be covered, and the ARB ruled that subsidiaries of publicly traded companies cannot avoid liability by virtue of their subsidiary status.
The opinion is here:
Johnson v Siemens SOX Subsidiary Liability
Sarelson Law Firm has handled Sarbanes-Oxley retaliation cases, including Santoro v. Bayview Financial, filed in the United States District Court for the Southern District of Florida, and Gifaldi v. Octagon Worldwide, Inc. & Interpublic Group of Companies, Inc., now pending before the DOL’s Office of Administrative Law Judges.
If you suspect that your employer is involved in any form of financial, tax or securities fraud, contact our firm today for a consultation.