"ARB decision clarifies burdens of proof applicable to SOX whistleblower claims"

"The ARB recently issued a decision that addresses in detail how investigators at the Department of Labour and administrative law judges should apply the burdens of proof required under Sarbanes-Oxley.

Fordham v Fannie Mae(7) focused on one of the elements of a whistleblower's prima facie burden – the requirement to prove that the protected activity was a "contributing factor" in the employer's adverse decision, which must be shown by a preponderance of the evidence.

The principal holding of the decision addressed the treatment of evidence supporting the employer's affirmative defence that it would have taken the same action against the employee even if the employee had not engaged in protected activity under Sarbanes-Oxley, which must be shown by a higher, "clear and convincing" burden by the employer. 

The ARB held that the administrative law judge improperly weighed evidence offered by the employer in support of its affirmative defence against the complainant's causation evidence as to how the Sarbanes-Oxley protected activity was a contributing factor in the adverse treatment.

According to the ARB, weighing the evidence in this way impermissibly resulted in application of the lower preponderance of the evidence standard that is applicable only to the complainant's proof, rather than applying the more onerous clear and convincing evidence standard required to be applied to the employer's evidence."


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