June/July 2006 Governance & Ethics News

Sarbanes-Oxley Whistleblower Protection Does Not Have Extraterritorial Application

Ruben Carnero brought suit against Boston Scientific Corporation ("BSC"), alleging that BSC had terminated him in retaliation for "whistleblowing"-for telling BSC that Latin American subsidiaries had created false invoices and had inflated sales figures. The district court determined that Carnero, an Argentinian citizen resident in Brazil who worked for the two BSC subsidiaries and whose whistleblowing pertained to their alleged improprieties in Latin America, could not sue BSC under the whistleblower protection provision contained in Title VIII, Section 806, of the Sarbanes-Oxley Act of 2002. In the district court's view, that provision is without extraterritorial effect. On appeal, the 1st Circuit affirmed.

Carnero v. Boston Scientific Corporation

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