U.S. 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, Daniel Wiessner reported for Reuters.

Photo Insert: Morgan Stanley has denied retaliating against whistleblower Christopher Garvey.

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 US 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 him.

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.

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