Experience has shown that Sarbanes-Oxley is failing to protect whistleblowers from retaliation by their employers. The safeguards promised by the act have failed to materialize when cases end up in court and experts at InfoWatch suggest that is because many employees are unclear as to who exactly Sarbanes-Oxley is supposed to protect.
About 750 people have filed complaints with the U.S. Labor Department under the provisions of Sarbanes-Oxley (SOX) that protect them against retaliation if they complain about a corporate ethics problem. Only five whistleblowers have won the resulting lawsuits, but one of those was recently overturned on appeal, and three others have been appealed, the IT Compliance Institute reports.
Fewer than 100 other cases have been settled, and most of the rest have been thrown out of court. It appears that corporate lawyers have found ways to reduce the law’s coverage to matters that directly impact shareholders, rather than indirectly through general corporate operations.
“I believe that employees at many companies have misjudged the sanctity of SOX. At one time the media depicted it as the panacea for all corporate violations and fraud. Internal controls and provisions protecting whistleblowers all seemed to make SOX ideal. In practice, many forgot whose interests SOX actually protects – the interests of investors and shareholders. The senior management of a company are legally entitled to what they like with their business, as long as it doesn’t infringe upon the interests of investors. So, if an employee informs on a company that has acted unethically, but without harming the shareholders, it is unlikely any law will protect him,” points out Denis Zenkin, marketing director at InfoWatch.
Source: IT Compliance Institute
