Two men share securities regulation news

Breaking news and expert analysis on legal and compliance issues

[Back To Home][Back To Archives]

From Securities Law Daily, May 22, 2013

Whistleblower Anti-Retaliation Protections Also Apply to Reports to Authorities Other Than the SEC

By Rodney F. Tonkovic, J.D.

A motion to dismiss a complaint brought by a former employee of UBS Securities, LLC was denied by a district court. The employee, Trevor Murray, alleged that UBS Securities, LLC and its parent company, UBS AG, (collectively, UBS) violated the whistleblower-protection provisions of the Dodd-Frank Act by terminating him in retaliation for making disclosures that were protected under the Sarbanes-Oxley Act’s whistleblower provision (Murray v. UBS Securities, LLC, May 21, 2013, Furman, J.).

Murray was employed as a Senior Commercial Mortgage-Backed Security Strategist and was responsible for researching and creating reports about UBS’s commercial mortgage-backed security (CMBS) products that were distributed to current and potential clients. In this position, he received nothing but positive performance reviews. Murray alleged that UBS personnel responsible for CMBS trading engaged in a concerted effort to influence him to skew his research in ways that were “more favorable” to UBS and that he was instructed not to publish any negative results.

Murray repeatedly told his manager about these attempts to influence his research in late 2011 and early 2012. After a performance review in January 2012, Murray's manager told him that he should write “what the business line wanted.” Murray was fired in February 2012.

Whistleblowers. Murray alleged that UBS violated Exchange Act Section 21F(h)(1)(A) by firing him in retaliation for reporting to his superiors that he was being pressured to produce false and misleading research reports about UBS’s securities products in violation of SEC rules. UBS countered that “whistleblower” is defined under Section 21F(a)(6) as a party providing information about a violation of the securities laws to the Commission. UBS, therefore, argued that Section 21F(h)(1)(A) applies only to a party providing information to the SEC, something Murray did not do. Murray asserted that Section 21F(h)(1)(A)(iii) provides an exception that protects an employee who makes disclosures required under SOX.

The court noted that four other cases confronting this issue sided with Murray’s reading of the statute. Moreover, the Commission has issued Rule 21F-2, which clarifies that the anti-retaliation protections also apply to individuals reporting to “persons or governmental authorities other than the Commission.” [emphasis in original].

The court then concluded that the SEC’s rule warranted Chevron deference. According to the court, Rule 21F-2 clarified the ambiguity between 21F(a)(6) and the broader scope of protection under Section 21F(h)(1)(A)(iii). Under the rule, a plaintiff is required to show that he or she either provided information to the SEC or that the disclosures fell under the categories listed in Section 21F(h)(1)(A)(iii). Here, the court found that Murray indisputably alleged that his termination was motivated by his making disclosures protected under SOX Section 806. Murray thus stated a claim, and the motion to dismiss was denied.

The case is 12 Civ. 5914 (JMF).

Attorneys: Michael Howard Isaac (Broach & Stulberg, LLP) for Trevor Murray. Daniel Patrick Rathbun (Gibson, Dunn & Crutcher) for UBS Securities, LLC.

Companies: UBS Securities, LLC

MainStory: TopStory DoddFrankAct NewYorkNews SarbanesOxleyAct

Securities Regulation Daily

Introducing Wolters Kluwer Securities Regulation Daily — a daily reporting service created by attorneys, for attorneys — providing same-day coverage of breaking news, court decisions, legislation, and regulatory activity.

A complete daily report of the news that affects your world

  • View full summaries of federal and state court decisions.
  • Access full text of legislative and regulatory developments.
  • Customize your daily email by topic and/or jurisdiction.
  • Search archives for stories of interest.

Not just news — the right news

  • Get expert analysis written by subject matter specialists—created by attorneys for attorneys.
  • Track law firms and organizations in the headlines with our new “Who’s in the News” feature.
  • Promote your firm with our new reprint policy.

24/7 access for a 24/7 world

  • Forward information with special copyright permissions, encouraging collaboration between counsel and colleagues.
  • Save time with mobile apps for your BlackBerry, iPhone, iPad, Android, or Kindle.
  • Access all links from any mobile device without being prompted for user name and password.