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US top court extends whistleblower protections

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(GlobalPost/GlobalPost)

The US Supreme Court ruled Tuesday that whistleblowers -- even private contractors working at an offending public company -- are protected under a law established to fight financial fraud at US corporations.

The justices voted six to three on a decision announced by Justice Ruth Bader Ginsburg that "outside professionals are responsible for reporting fraud by the public companies they serve."

In 2002, following the bankruptcy of Texas giant Enron, brought down by its fraudulent financial accounting manipulations, Congress took aim at protecting public company investors and reestablishing confidence in financial markets by passing the Sarbanes-Oxley Act.

A key provision of the law forbade public companies from punishing employees who call out fraudulent practices.

US financial services corporation FMR, parent company to Fidelity, had argued that the provision "protects only employees of public companies, and not employees of private companies that contract with public companies," the Supreme Court opinion said.

But Ginsburg, in announcing the majority opinion, said "the contractor's employees are likely to be the only firsthand witnesses to the shareholder fraud of concern to Congress."

The high court heard from two former employees of private companies that had contracted with Fidelity.

After reporting financial irregularities, Jackie Lawson said she resigned amid bullying, and Jonathan Zang said he was dismissed.

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http://www.globalpost.com/dispatch/news/afp/140304/us-top-court-extends-whistleblower-protections-0