US whistleblower law doesn't protect overseas workers, court rules

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

A unanimous three-judge panel of the US Court of Appeals for the DC 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 DC Circuit said SOX's whistleblower protections do not prohibit securities fraud, so any impact on the US 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.

The Boston-based 1st Circuit and the 2nd Circuit in New York have come to the same conclusion.

Garvey, who represented himself in the appeal, did not immediately respond to a request for comment. Nor did Morgan Stanley, which has denied retaliating against Garvey.

Garvey was the executive director of a legal and compliance division for Morgan Stanley subsidiaries based in Japan and Hong Kong from 2006 to 2016, according to court filings. He claims he was forced out of his job after reporting alleged corporate corruption and other legal violations to his superiors.

Garvey filed a SOX complaint against Morgan Stanley with the US Department of Labor. An administrative law judge ruled that SOX did not apply to overseas workers, and a review board agreed last year.

Garvey appealed to the DC Circuit, arguing that SOX whistleblower protections can apply when alleged legal violations impact US markets.

In the 2010 case Morrison v. National Australia Bank, the US Supreme Court held that "when a statute gives no clear indication of an extraterritorial application, it has none."

The court on Friday said that by applying Morrison, it was clear that SOX was not meant to extend to workers outside the country.

"There is nothing in SOX to indicate that it has an extraterritorial reach covering a person like Garvey, who was employed exclusively in the overseas operation of a foreign subsidiary of a US-based corporation," Circuit Judge Harry Edwards wrote.

The panel included Circuit Judges Cornelia Pillard and Judith Rogers.

The case is Garvey v. Administrative Review Board, US Court of Appeals for the DC Circuit, No. 21-1182. (Source: Reuters)

Press TV’s website can also be accessed at the following alternate addresses:

www.presstv.co.uk