SOX Protection Poor

Sarbanes Oxley Whistleblower Protection Deficient

The Sarbanes Oxley Act (“SOX”)  provides protection for certain whistleblowers of public companies who report violation of SOX, mail fraud, wire fraud or SEC law and have a reasonable belief there is a violation.¹See Section 806 of SOX. It was designed to prevent another Enron.

The whistleblower only has 180 days after the retaliation to file a complaint with OSHA. 806 (b)(2)(D).

The initial results have been dismal.

Sox protection poor:

“The Wall Street Journal reported on September 4 [2008] that out of 1,273 complaints filed with the Department of Labor under this whistleblower protection provision since 2002, the government has ruled in favor of the employee only 17 times and has dismissed 841 cases. Many of these cases have apparently been dismissed on the grounds that the employee worked for a corporate subsidiary, because the Department takes the position that subsidiaries are not covered by the statute. * * * . . . [W]e can clearly state that it was by no means our intention to restrict these important whistleblower protection to a small minority of corporate employees or to give corporations a loophole to retaliate against those who would report corporate fraud by operating through subsidiaries.” From September 9, 2008 letter from Senators Patrick Leahy and Charles Grassley to Secretary of Labor Elaine Chao. The Labor Department started allowing whistleblowers to attempt to prove that the subsidiary they worked for was an “agent” of the public company.

Tollefsen Law has litigated several SOX whistleblower cases. The brief we filed requesting a Writ of Certiorari in the United States Supreme Court covers the essential background material on SOX whistleblowing protection. Petition for Writ of Certiorari: Tides-Neumann-Cert-Petition