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Whistleblowers not protected for leaks to the media

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A district court decision that disclosing information about fraud or securities violations to the media is not protected under the…

A district court decision that disclosing information about fraud or securities violations to the media is not protected under the whistleblower provision of the Sarbanes-Oxley Act was affirmed on Tuesday by the U.S. Court of Appeals in San Francisco (9th Cir.), sitting in Seattle.

Circuit Judge Barry Silverman wrote for the three-judge panel: "[B]y its express terms, the whistleblower provision of the Sarbanes-Oxley Act . . . protects employees of publicly-traded companies who disclose certain types of information only to the three categories of recipients specifically enumerated in the Act — federal regulatory agencies and law enforcement agencies, Congress, and employee supervisors. Leaks to the media are not protected."

The case, Tides v. Boeing, involved two auditors, Nicholas Tides and Matthew Neumann, who worked in Boeing's IT Sarbanes-Oxley Audit group. The two men separately complained to management concerning deficiencies in Boeing's auditing practices, which were potential violations of the Sarbanes-Oxley Act. In mid-April 2007, Tides and Neumann were contacted by a Seattle Post-Intelligencer reporter requesting a discussion regarding Boeing's compliance with the act. Eventually, both auditors disclosed company information to the reporter and the story was published.

Boeing realized that employees were releasing information to the media, a violation of company policy, and began an investigation. Tides and Neumann were subsequently terminated. In December 2007, Tides and Neumann filed separate Sarbanes-Oxley whistleblower complaints with the U.S. Occupational Safety and Health Administration. The complaints were later combined.

The two men argued that their disclosures were protected under the act "because reports to the media may eventually 'cause information to be provided' to members of Congress or federal law enforcement or regulatory agencies," according to the Ninth Circuit opinion.

The district court held that the act did not expressly state that disclosures to the media were protected. The Ninth Circuit affirmed, noting that "[i]f Congress wanted to protect reports to the media . . . it could have listed the media as one of the entities to which protected reports may be made."

Charles Glasser, an attorney for Bloomberg News, doesn't see this decision having a major effect on journalists. "This isn't under the whistleblower act," he said. "I don't really see it as much of an event, at least from a newsgathering standpoint."