By now, corporate counselors are well acquainted with the fact that the Sarbanes-Oxley Act (SOX) and its whistleblower protections apply to publicly traded companies. What is less well known is that the Sarbanes-Oxley whistleblower protections can also apply to non-public subsidiaries of publicly traded companies.
Sarbanes Oxley And The Non-Public Subsidiary: A Non-Sequitur?
By now, corporate counselors are well acquainted with the fact that the Sarbanes-Oxley Act (SOX) and its whistleblower protections apply to publicly traded companies. What is less well known is that the Sarbanes-Oxley whistleblower protections can also apply to non-public subsidiaries of publicly traded companies. Although the Department of Labor Administrative Review Board noted that it has not addressed the issue at the appellate level, a number of OSHA Administrative Law Judges (who hear SOX whistleblower cases at the trial level) have done so, and their decisions uniformly hold that SOX <i>can</i> protect the employees of <i>non-public subsidiaries</i> of publicly traded companies under certain circumstances. Those decisions also provide practical guidance for corporate counselors who want to limit SOX coverage strictly to the publicly-traded parent.
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