Exploring Corporate Governance Around the World

By Allison Garrett, Senior Vice President for Academic Affairs at Oklahoma Christian University





Thursday, January 12, 2006

Carnero v. Boston Scientific: No Extraterritorial Application of SOX Whistleblower Provisions

The First Circuit held this week that the civil whistleblower protection provision of the Sarbanes-Oxley Act (18 U.S.C. 1514A) does not have extraterritorial application.

Carnero, an Argentinian citizen residing in Brazil, worked for two Boston Scientific Corporation subsidiaries. His whistleblowing related to BSC's Latin American operations. He allegedly reported accounting misconduct to his supervisors at BSC.

Carnero was employed by the Argentinian and Brazilian subsidiaries of BSC and the allegedly fraudulent conduct occurred in Latin America.

After Carnero's employment with BSC was terminated, BSC brought a claim against him in an Aregentian court for defamation. Carnero sought protection from the U.S. DOL under the whistleblower protection provision of SOX. The DOL dismissed his claim, ruling that the whistleblower protection provision does not apply to employees of covered companies working outside the U.S.

Carnero then filed suit in the U.S. District Court for the District of Massachusetts seeking a de novo review of the SOX whistleblower claim. That court dismissed the claim and he appealed to the First Circuit.

The First Circuit looked at legislative intent, finding that section 1514A was silent regarding any intention by Congress to apply it extraterritorially. Congress did, though, expressly provide for extraterritorial application of a criminal whistleblower provision.

A link to the decision follows:

http://fsnews.findlaw.com/cases/1st/041801.html

1 comment:

Holla said...

Any recent developments on extraterritorial application of Section 806?