Sarbanes-Oxley Criminal Whistleblower Provisions and the Workplace: More Than Just Securities Fraud

A law called the Sarbanes-Oxley Act was created to protect people who report fraudulent activity that could harm innocent investors. It was made in response to the Enron scandal. However, the law’s whistleblower rules can be interpreted to cover more than just fraud that affects shareholders. For example, even if a company is small and privately owned, an employee who reports any kind of illegal activity to the police is protected under the law, and the company could face serious penalties. Simply put, the Sarbanes-Oxley Act (SOX) has criminal sanctions for individuals and organizations who engage in misconduct related to financial fraud. This can include fines and jail time. The law aims to prevent retaliation against employees who report violations of federal securities laws, but the specific details and potential consequences are still being worked out in the courts. This means that employees and companies could potentially face serious legal trouble for actions that were previously only subject to civil penalties. Overall, SOX is meant to hold companies and individuals accountable for their actions in the corporate world. If an employee complains about not getting paid enough, it may not seem like a big deal under a law called Sarbanes-Oxley. But if the pay issue affects the company’s financial reports, it could be a problem. The same goes for complaints about discrimination. Even if there’s no lawsuit, sharing the information with others could be protected by the law. And if the company tries to punish the person who complained, they could be in big trouble, like breaking other laws. If someone breaks the rules about reporting wrongdoing at a big company, they could face criminal charges and big fines. The Securities and Exchange Commission (SEC) can enforce these rules. Even if the SEC doesn’t pursue criminal charges for breaking the reporting rules, they can still investigate and charge the company for other illegal activity. The SEC and the Department of Labor (DOL) work together to handle complaints about breaking the reporting rules. A former manager at Coca-Cola claimed he was fired for reporting that Coke manipulated market tests. He sued under civil RICO and retaliation, and the case settled, but the SEC and DOJ investigated. The company settled with the SEC, and DOJ closed its investigation. This case shows that whistleblowers can lead to federal investigations and large penalties for employers, even if the whistleblower doesn’t claim protection under SOX.

Source: https://www.floridabar.org/the-florida-bar-journal/sarbanes-oxley-criminal-whistleblower-provisions-and-the-workplace-more-than-just-securities-fraud/