Sarbanes includes protection for whistle-blowers, in an effort to encourage peop

Question

Sarbanes includes protection for whistle-blowers, in an effort to encourage people to come forward to report suspected fraudulent activity within their own company. The protections for whistle-blowers and the stricter punishments for officers, board members and auditors for destroying company documents are both criminal in nature and would apply to non-profit corporations as well as the publicly-traded companies targeted in Sarbanes, experts have said.

1. Do you think more people have come forward because of this provision?

2. Why or Why not?

3. If you can find an example and share it with us.

4. Please provide 1 reference in APA format.

Explanation / Answer

1. Though the SOX has provided more legal protection to the whistleblowers , the enactment of the whistlblowers policy did not result in sufficient increase in the no of whistleblowers coming forward as expected.

There are many reasons for it like;

1. Retailation - Most of the whistleblowers faced various retaliations like job loss, transfer, harrassment , sexula harassment, deprivement from bonus and increments . In most of the cases it is a very long and cumebersome process to file a litigation and win against the mighty corporations. Despite SEC's help and support , the fear od retaliation has prevented many whistleblowers from coming forward.

2. Govt 's slow mechansim to act of whistleblowers'compalints

3. Non addressal of wrongdoing or misconduct effectively

4. Non implementation of poliscies fully in corporation , like the hot line for whistleblower either not present or the contact nos not known to many of the coprations even now.

Acknowledgement : Refrence from "Sarbanes Oxley 10 years later ' by Richard Moberly, University of Nebraska, College of Law , http://digitalcommons.unl.edu/cgi/viewcontent.cgi?article=1153&context=lawfacpub

Example Of whistle blowing :

We can cite the example of whistle blowing by the Head Trader of Paradigm Capital Management Inc who disclosed the firm's practice of allegedly engaging in trades without effective client disclosure and consent and reported to SEC. Also a case filed for retailation against whistleblower.On June 16,2014, SEC issued an order gainst the company and Paradigm Capital Management Inc paid prejusdgment interest $181,771, civic penalty $300,000 and disgorgement of $1.7 million.

Acknowledgement : Top 10 Whistleblowing And Retaliation Events Of 2014: By Steven Pearlman, Proskauer Rose LLP, ; http://www.law360.com/articles/603259/top-10-whistleblowing-and-retaliation-events-of-2014

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