The U.S. Supreme Court on Thursday made it easier for financial sector whistleblowers to win lawsuits accusing companies of unlawfully firing them as retaliation for disclosing wrongdoing, rejecting a bid by Switzerland’s UBS Group to impose a higher bar.
The unanimous decision by the justices reinstated a $1.7 million jury verdict for former UBS bond strategist Trevor Murray, who has accused the company of firing him in retaliation for refusing to publish misleading research reports and complaining about being pressured to do so. A lower court had thrown out the jury verdict.
UBS had wanted the Supreme Court to require plaintiffs in whistleblower lawsuits to prove a company’s retaliatory motives, a difficult task.
UBS has said Murray was fired as part of a cost-cutting campaign that eliminated thousands of jobs, not because of his complaints. A jury in federal court in Manhattan sided with Murray in 2020, and U.S. District Judge Katherine Polk Failla, who presided over the trial, rejected a bid by UBS to set aside the verdict.
But the New York-based 2nd U.S. Circuit Court of Appeals, in overturning the verdict in 2022, ruled that the jury should have been instructed by the trial judge that in order to hold UBS liable under a 2002 federal law called the Sarbanes-Oxley Act, Murray had to prove that the company had acted with retaliatory intent.
Sarbanes-Oxley created enhanced accounting standards for publicly traded U.S. companies after a series of accounting scandals, along with new legal protections for employees who report illegal conduct. Named after its bipartisan sponsors — Democratic U.S. Senator Paul Sarbanes and Republican U.S. Representative Michael Oxley — it was intended to help protect investors from fraudulent corporate financial reporting.
The 2nd Circuit ruling had created a split with at least two other federal appeals courts that decided that the lack of intent can be raised as a defense in a Sarbanes-Oxley case but must be proven by the defendant.
Murray, who worked in UBS’s mortgage securitization unit, accused UBS officials of pressuring him to issue skewed and bullish research on commercial mortgage-backed securities in order to support the bank’s trading and underwriting operations. He has said he was fired in 2012 about two months after complaining to supervisors and despite receiving excellent performance reviews.
President Joe Biden’s administration had backed Murray in the appeal. The Supreme Court heard arguments in the case in October.
UBS was represented by Eugene Scalia of the firm Gibson Dunn & Crutcher, the son of late Supreme Court Justice Antonin Scalia and a former U.S. labor secretary, who was making his first appearance before the Supreme Court.