Sarbanes-Oxley
I found this on the web and I thought it would be a good preface before we officially discuss it in class:
With the enactment of the Sarbanes-Oxley Corporate Reform Act of 2002, internal and external whistleblower protection has been extended to all employees in publicly traded companies for the first time. The provisions of Sarbanes-Oxley
- Make it illegal to "discharge, demote, suspend, threaten, harass or in any manner discriminate against" whistleblowers
- Establish criminal penalties of up to 10 years for executives who retaliate against whistleblowers
- Require board audit committees to establish procedures for hearing whistleblower complaints
- Allow the secretary of labor to order a company to rehire a terminated employee with no court hearing
- Give a whistleblower the right to a jury trial, bypassing months or years of administrative hearings
Is this in line with what we drew out today? What else should be added to this list? Why not apply this rule to private companies as well? There is a penalty of ten years in jail for the executives that retaliate, but this only gives the whistleblower a rehire. Is this sufficient? The whistleblower is sure to encounter forms of harassment that are not addressed here. Are punitive or even treble damages in order? The rest of the whistleblower's life could be ruined and a rehire does not seem sufficient for someone who sacrifices their life for the good of the whole. These people should be regarded as heroes who fight the potentially life threatening battle of obedience to authority. Does anyone remember Stanley Milgram?
posted by Ryan E Gralia at
5:22 PM
3 Comments:
First of all the federal government cannot make any sort of law for private companies that do not engage in interstate commerce. Also any attempts for the government to to regulate truly private companies would be regarded as an invasion of privacy. Who says that if you own a business that you can't fire someone for "blowing the whistle" on your activities? You (or your partners) are the ones who have something to lose. If you were committing crimes then the employee might be able to sue under the public policy exception to employment at-will anyway.
Unfortunately, the stigma of the whistleblower is that they are a "rat." While they may be doing a public service it is very hard to change the status quo. This may at least be partly due the the mass-media's willingness to put anybody with a story in the public eye. Maybe we should focus on a different area for reform.
Maybe the media needs reform now not business. I think S-O is about as far as the government can go without severely affecting our ability to engage in international business.
We live in the age of information those who control the information have the greatest power.
Sarbanes-Oxley is based on protecting the interests of shareholders and others who were harmed in the recent corporate scandals. Most of its requirements are overseen by the SEC. Thus, it's focused on publicly traded companies.
However, it's not the case that the government can't regulate private companies. a f is correct Congress couldn't rely on the Commerce Clause power to justify legislation that would regulate private parties that truly have no involvement in interstate commerce, but -- because of the expansive interpretation of what constitutes having an effect on interstate commerce -- such wholly local entities are extremely rare.
A number of federal whistle-blower protection laws (as well as state laws) protect whistle-blowers in non-publicly-traded companies as well as those publicly traded.
Keep up the great conversation, but I wanted to be sure we were clear on the basics.
In response to the post I think that punitive damages should be awarded to the whistleblower and to the government, but NOT to the degree of treble damages. Treble damages provide an unecessary economic incentive/compensatory incentive, and may encourage people to "blow the whistle" primarily for the cash incentive.
In an ideal society, all whistleblowers would be sincere and working for the good of the public. Unfortunately, this is not always the case.
It is necessary that the government avoid promoting "jackpot justice". People do file suits to 'cash in', and the government may be prone to ruling in favor of the whistleblower becasue the government looks forward to the compensation it will receive.
Such was the case with Douglas Durand and TAP Pharmeceuticals. He started working for the company, and immediately suspected the company of medicare fraud. Instead of working to fix the problem, he spent 7 months gathering evidence of the supposed fraud. In a trial he was awarded $126 million.
Later, Durand's evidence fell apart and the TAP defendants were declared "not guilty."
In class I feel that our discussions tend to favor the employee, and view the big business as "evil". However, its important to remember that there are many disgruntled employees that may abuse these whistleblowing protections.
Unfortunately I had trouble including the HTML tag, but the article I read was called "The Dark Side of Whistle Blowing", under EBSCO host.
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