Whistle Blower? 1580

  • I work for a publicly held company, and have reported a supervisor for using his department’s budgeted funds to purchase items for himself. Can I be considered a SOX whistle blower?

  • I apologize if this question is too basic, but I just found this site and thought I would give it a shot. I can expand if anyone is interested but was trying to provide just basic information.

  • From The Sarbanes-Oxley Act:
    1514A. Civil action to protect against retaliation in fraud
    TRADED COMPANIES.No company with a class of securities registered
    under section 12 of the Securities Exchange Act of 1934
    (15 U.S.C. 78l), or that is required to file reports under section
    15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78o(d)),
    H. R. 376359
    or any officer, employee, contractor, subcontractor, or agent of such
    company, may discharge, demote, suspend, threaten, harass, or
    in any other manner discriminate against an employee in the terms
    and conditions of employment because of any lawful act done by
    the employee
    (1) to provide information, cause information to be provided,
    or otherwise assist in an investigation regarding any
    conduct which the employee reasonably believes constitutes
    a violation of section 1341, 1343, 1344, or 1348, any rule or
    regulation of the Securities and Exchange Commission, or any
    provision of Federal law relating to fraud against shareholders,
    when the information or assistance is provided to or the investigation
    is conducted by
    (A) a Federal regulatory or law enforcement agency;
    (B) any Member of Congress or any committee of
    Congress; or
    © a person with supervisory authority over the
    employee (or such other person working for the employer
    who has the authority to investigate, discover, or terminate
    misconduct); or
    (2) to file, cause to be filed, testify, participate in, or
    otherwise assist in a proceeding filed or about to be filed
    (with any knowledge of the employer) relating to an alleged
    violation of section 1341, 1343, 1344, or 1348, any rule or
    regulation of the Securities and Exchange Commission, or any
    provision of Federal law relating to fraud against shareholders.
    (1) IN GENERAL.A person who alleges discharge or other
    discrimination by any person in violation of subsection (a) may
    seek relief under subsection ©, by
    (A) filing a complaint with the Secretary of Labor;
    (B) if the Secretary has not issued a final decision
    within 180 days of the filing of the complaint and there
    is no showing that such delay is due to the bad faith
    of the claimant, bringing an action at law or equity for
    de novo review in the appropriate district court of the
    United States, which shall have jurisdiction over such an
    action without regard to the amount in controversy.
    (2) PROCEDURE.
    (A) IN GENERAL.An action under paragraph (1)(A)
    shall be governed under the rules and procedures set forth
    in section 42121(b) of title 49, United States Code.
    (B) EXCEPTION.Notification made under section
    42121(b)(1) of title 49, United States Code, shall be made
    to the person named in the complaint and to the employer.
    © BURDENS OF PROOF.An action brought under
    paragraph (1)(B) shall be governed by the legal burdens
    of proof set forth in section 42121(b) of title 49, United
    States Code.
    (D) STATUTE OF LIMITATIONS.An action under paragraph
    (1) shall be commenced not later than 90 days after
    the date on which the violation occurs.
    (1) IN GENERAL.An employee prevailing in any action
    under subsection (b)(1) shall be entitled to all relief necessary
    to make the employee whole.
    H. R. 376360
    (2) COMPENSATORY DAMAGES.Relief for any action under
    paragraph (1) shall include
    (A) reinstatement with the same seniority status that
    the employee would have had, but for the discrimination;
    (B) the amount of back pay, with interest; and
    © compensation for any special damages sustained
    as a result of the discrimination, including litigation costs,
    expert witness fees, and reasonable attorney fees.
    (d) RIGHTS RETAINED BY EMPLOYEE.Nothing in this section
    shall be deemed to diminish the rights, privileges, or remedies
    of any employee under any Federal or State law, or under any
    collective bargaining agreement.’’.
    (b) CLERICAL AMENDMENT.The table of sections at the beginning
    of chapter 73 of title 18, United States Code, is amended
    by inserting after the item relating to section 1514 the following
    new item:
    1514A. Civil action to protect against retaliation in fraud cases.’’.
    hope this helps,

  • I am a consultant :oops: , so I can not avoid to tell the all times classic:
    It depends 😄
    Where do you live?
    A. If you live in the USA, perhaps you may prove that you are a whistleblower.
    B. If you live outside the USA, the clear answer is no, you are not a whistleblower, it does not apply to you.
    Are whistleblowers in foreign countries protected against retaliation?
    SOX 806 covers any company that has a class of securities registered in accordance with Section 12 of the Exchange Act or that is required to file reporters under Section 15(d) of the Exchange Act
    Under the Exchange Act, foreign companies are not distinguished from U.S. companies
    SEC exercises regulatory discretion to make accommodations to address potential conflicts with foreign laws
    In Carnero v. Boston Scientific Corp., a U.S. District Court judge in Boston dismissed a civil whistleblower complaint brought by an Argentine citizen who worked for the Argentine and Brazilian subsidiaries of a U.S. company
    The judge wrote in her decision
    The protection of workers is a particularly local matter, and nothing in the legislative history supports the assertion that the language of SOX 806 protecting an employee’ was meant to include all employees wherever they may work
    Concone v. Capital One Financial, was filed by an Italian employee of a U.S. company who worked in Italy and the United Kingdom
    Protecting employees is a local matter again…
    Employment laws are, as a policy matter, always directed by the country in which the employee works. Employment laws embody important economic or welfare policies in every country

  • Although I don’t know the specifics of the individual cases, I can’t help but feel that those decisions are a bit of a cop out.
    Ultimately the parent company, which has a duty to protect whistleblowers, has, by definition, control over subsidiaries. One should not expect a lower standard of governance within any controlled location of a multi-national company.

  • Yikes-A few tips.
    Beware that whistleblowing, it seems now, that everywhere retaliation is not an exception, but common practice. It tends to be the rule in many organizations. Before blowing the whistle or before a complaint is taken up, make sure to find all the documentation of wrongdoing you can and keep several copies. Insist on confidentiality if necessesary, though that may or may not prevent bringing unwanted attention to you. You will be singled out as a defective employee.
    Evaluate whether your job is worth losing in relation to the level of wrong doing, and realize that persisting to demand investigation will not usually fall on sympathetic ears anywhere. Have options ready to mitigate any uncertainty that will soon exist about your perhaps well deserved, well educated, planned career decision that put you in your current position.
    If there are sympathetic ears, know who they are and don’t alienate them. Find allies and or be aware of workplace politics that are in place, and avoid some, as they may only pretend to be on your side. They may like the guy you are causing trouble for no matter who is right.
    I have experienced what my union later published in a guide on workplace violence as ‘Management Encouraged Self- Blame.’ This is typified by generally psycological antagonizing consisting of finding any subtle reason for a manager to scrutinize work that is as always well done and consistant.
    This problem with your work is of course ’ All your own doing.’ And you will not be able to do anything correct in the course of a day according to a retaliatory supervisor. Your interpersonal relationships will become ‘so poor as to disrupt the productive workplace,’ when all you do is continue to be the same amiable person as before your complaint when your evaluations were favorable. Be ready to see the worst in people and human nature. Expect harassment from anyone and document it when it happens.
    Some good sources I have found are Fighting Fair previously titled Fighting with Ghandi and there are a couple books by Eric Berne that I found helpful.
    Make records of your own of your start times, work performed, and any behavior of co-workers that may make up a pattern of retaliation. Be ready for accusations that though undocumented at the time or at any time will become part of your employee file, often weeks or months after the event allegedly ocurred. Document your complaint before the retaliation, and make sure to follow any proper channel even though you have perhaps been denied access to the process, as will happen. They just want you to forget it and go away, so why don’t you?
    Around every corner could be any kind of accusation, both at work and in your private time, so beware of that also, and document your outside of work activity- sad but seriously it is not a bad Idea.
    Many people who are comfortable to initiate corrupt practices are well aware that they are surrounded by people who would rather get rid of anyone who asks for investigation, and they have a heirarchy in place to disrupt any of your respectable efforts to make people do the right thing, and to properly discipline and discourage wrongdoers…
    It often works the other way around I have found, as this is what you have done and you are singularly to blame for this . Be ready for it.
    Be ready for conflict, and I cannot reiterate enough- find and copy to a safe place all the irrefutable evidence that shows impropriety, and preferrably before any conflict begins. Make sure you see clear statutory or SOP guidence that shows violations and remedies. Count on this: You won’t have access to anything once you make a complaint, and evidence will be destroyed and people will lie and perjure, rather than take their lumps. Copious confusion will be injected in to the most simple things.
    Good Luck and be patient with a ‘process’ designed to test your patience any way possible. It usually is not as simple as folowing rules and contracts.
    As Far as public employees, the Supreme Court has recently limited free speech in the area of whistleblowing through internal complaint with Garcetti v. Ceballos. Pickering standard of needing to go public is the new standard for this decision. (A cop out as described above, with dissenting opinion calling the new court misguided .)

  • These are all good comments by the SOX experts 🙂
    I agree that individuals reporting need to be careful and realistic when taking a chance with their career . If the company has unethical folks in management, they may find other excuses to dismiss a whistleblower further down the road, esp. if SOX launches an investigation and fines a company substantially. I can envision the work environment being miserable in this scenario.
    As SS shares, make sure the facts are solid and the incident(s) are clearly violations of fraudulent activity . For example, what if someone misinterpreted what was going on or reported someone based on rumors – they’d ruin their career.
    Secondly, I’d work through appropriate channels (following management protocol). Many companies include the provision to report fraud anonymously and this way an employee may not burn bridges in their career with a good company. I’d recommend that folks avoid reporting to the SEC directly unless it’s an act of last resort or fraud at the highest levels of management.
    If the incident is reported internally through the appropriate channels than I’m seeing this more as people doing their job than being a whistleblower. However, if no one takes action or the matter is too sensitive (e.g., your own management) then an individual could be moving into the whistleblower category by escalcating this outside of normal management protocols or directly to the SEC.

  • Good News on retaliation maybe…
    As far as retaliation in general, our sometimes misguided Supreme Court was unanimously lucid today on a retaliation issue.

    Hopefully you won’t have to go through all that though…

  • The U.S. Court of Appeals for the First Circuit decided on January 5, 2006 that the whistleblowing protections of the Sarbanes-Oxley Act do not extend to foreign citizens working outside the United States for foreign subsidiaries of companies covered by SOX.
    Whistleblower protection was not intended to apply extraterritorially. The Court explained that if Section 806 were given extraterritorial reach in this case, it would empower U.S. courts and/or agencies to interfere with the employment relationship between foreign employers and their foreign employees.
    Congress did not provide any mechanism for enforcing Section 806 in a
    foreign setting. It did not provide the Department of Labor with
    extraterritorial investigatory powers.
    The Carnero decision is the best line of defense for employers that are faced with whistleblowing claims by foreign employees. (Carnero v. Boston Scientific Corp., 433 F.3d 1 (1st Cir. 2006).)

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