U.S. whistleblower law doesn't protect overseas workers, court rules

Employees who work overseas for U.S.-based companies are not protected by a federal law prohibiting retaliation against whistleblowers who raise concerns about violations of securities laws, a U.S. appeals court ruled on Friday.

A unanimous three-judge panel of the U.S. Court of Appeals for the D.C. Circuit rejected a bid by Christopher Garvey, a former top Asia-based lawyer for Morgan Stanley, to revive claims that he was forced to resign in 2016 after reporting alleged illegal activities that predominantly occurred outside the United States.

Garvey had argued that the Sarbanes–Oxley Act of 2002 (SOX), which protects workers who report securities violations, can apply to securities fraud that occurs overseas but affects U.S. markets.

But the D.C. Circuit said SOX's whistleblower protections do not prohibit securities fraud, so any impact on the U.S. was irrelevant in applying the law. SOX created protections for employees, so the key question is whether they are based in the United States, the panel said.