District Court Denies UBS Summary Judgment in Sarbanes-Oxley Whistleblower Lawsuit

The U.S. District Court for the District of Connecticut has decided not to grant summary judgment to UBS AG (UBS) and UBS Securities LLC in Mary Barker’s lawsuit claiming that her firing violated the whistleblower provision of the Sarbanes-Oxley Act. Judge Janet Hall found that UBS failed to show that there was “clear and convincing evidence” that the plaintiff would have been let go “regardless of any protected activity.”

Barker, who started working for UBS in 1998, was terminated from her job in 2008 during a “large-scale” layoff. At the time, she was working in the Business Management Group of the Equities Chief Operating Officer’s office as an associate director. Barker filed her complaint the following year contending that she was actually let go because she “discovered reporting discrepancies” while working on a project to “reconcile” UBS’s New York Stock Exchange holdings. Barker contended that after this, she was “retaliated against or constructively discharged.” She also said that one of her bosses not only failed to adequately support her, but also had been “overlooking her for projects.”

Seeking summary judgment, UBS said that Barker failed to show that her “protected” behavior led to her termination. The district court, however, disagreed with UBS, countering that although the financial firm showed that it was undergoing “extreme financial hardship,” this does not show why the plaintiff, in particular, was let go.

The court also disagreed with two of UBS’s other contentions: That Barker did not actually think she was whistleblowing on “securities fraud” (because she failed to use the terms “violation of securities laws” or “fraud” when talking about the gaps she discovered in her project) and she should have been aware that the discrepancies she found were immaterial to the firm’s shareholders. Booting these claims, however, the court said that an employee doesn’t have to specifically reference a certain statute or actually allege fraud to take part in a protected activity and/or believe that UBS might have violated securities laws. The court also noted that even though Barker was likely familiar with securities regulations, this does not mean she possessed enough expertise in this area to “make it objectively unreasonable” for her to think that for UBS to properly disclose its exchange assets was a violation of securities regulations.

The Sarbanes-Oxley Act’s Whistleblower Law
Under the Sarbanes-Oxley Act, the employees of publicly traded companies that have violated SEC regulations, or any federal law provision related to fraud committed against shareholders, are guaranteed certain protections. Reporting the alleged fraud is considered protected activity under SOX and employees that step forward cannot be illegally discriminated against (including reprimanded, fired, or harassed). Employees that prevail under Sarbanes-Oxley’s whistleblower may be entitled to reinstatement, “make whole” compensation, back pay plus interest, special damages, affirmative relief, and lawyers’ fees and costs.

Our securities lawyers at Shepherd Smith Edwards and Kantas, LTD, LLP have thousands of investors in cases against hundreds of financial firms for over 20 years. Your initial case evaluation with one of our financial fraud attorneys is free.

Read the Decision (PDF)

Sarbanes-Oxley Act of 2002

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