Sarbanes-Oxley Act Provisions Regarding Whistleblowers. Key Protections for Whistleblowers and How to Navigate Retaliation Claims.
Trillions of dollars have been lost by investors, and frequently by taxpayers, due to securities fraud and other fraudulent acts affecting publicly traded corporations throughout history. Misconduct of this nature has also been a major cause of economic disasters, such as the financial meltdown of 2008. The Sarbanes-Oxley Act ("SOX"), a comprehensive federal statute aimed at stopping, exposing, and punishing securities fraud and related illicit activity, was passed as a result of that disaster.
The SEC, like many other government agencies, depends on Sarbanes Oxley whistleblower who report suspected criminal conduct under the Sarbanes Oxley Act so that it can look into and take enforcement action.
Whistleblowers almost always work for businesses breaking securities rules. Strong anti-retaliation laws present in SOX safeguard whistleblowers and offer recompense and other forms of remedies if their employers are shown to have participated in illegal retaliation.
Before disclosing their employer's SOX infractions, anyone thinking about doing so should speak with a knowledgeable whistleblower lawyer.
The Legal Rights of Whistleblowers and the Sarbanes-Oxley Act
A federal law known as the Sarbanes-Oxley Act (or "Sarbanes-Oxley") set new and improved requirements for management, public accounting firms, and boards of public companies. Public corporations are required by Sarbanes-Oxley to establish a company ethics code and establish an internal process for receiving, reviewing, and soliciting Sarbanes Oxley whistleblower employee allegations of fraud or ethical transgressions. The law provides for administrative, civil, and criminal enforcement of both corporate and individual culpability.
Which types of businesses are subject to Sarbanes-Oxley regulations?
All domestic public corporations are subject to the law. Non-public companies that have debt securities listed on a public market are also included. Even though they aren't publicly traded themselves, businesses that conduct business with publicly traded corporations are subject to some Sarbanes-Oxley provisions. Under some conditions, subsidiaries of covered public companies may also be held accountable for taking retaliatory action against a whistleblower.
Sarbanes-Oxley, among other things, protects a Sarbanes Oxley whistleblower who work for covered businesses under certain circumstances when they reveal information they reasonably believe to be a violation of federal securities law, SEC regulations, or any other federal law about shareholder fraud.
The Sarbanes-Oxley Act
The Sarbanes-Oxley Act was enacted in reaction to multiple scandals involving both public and private companies. Sections of the act add criminal sanctions for specific corporate malfeasance and address the duties of company boards.
Protection of Whistleblowers Against Retaliation
Employees of public corporations who face retaliation due to disclosures regarding mail, bank, wire, or securities fraud may file a civil lawsuit under Section 806 of Sarbanes-Oxley, which is codified at 18 U.S.C. § 1514A. Within 180 days of your employer's retaliation, you must file a written complaint with any office of the Occupational Safety and Health Administration, a division of the Department of Labor, to pursue a whistleblower claim.
A Sarbanes-Oxley assertion must be supported by evidence showing that:
You're a worker participating in authorized activities
You were subjected to adverse employment action by a covered employer and
The adverse employment action was at least partially caused by the protected behavior
Deadline
Within 180 days of the claimed violation or the date the employee learned of the alleged violation, a Sarbanes-Oxley complaint must be submitted. If you are a manager, supervisor, officer, or particular category of an independent contractor working for a covered business, you are considered an employee for whistleblower protection, whether you are an employee now or in the past.