Commentary: Whistleblowers and Sarbanes-Oxley.

• Date: 17 September 2007

Byline: Tracy Coenen

One of the major selling points of the Sarbanes-Oxley Act of 2002 was the protection for whistleblowers. The legislation required public companies to put into place "anonymous reporting mechanisms" (like hotlines) so that employees could report suspected fraud without fear of reprisal. It further required companies to protect employees from retaliation when they report suspicions of financial improprieties. In the beginning, corporate lawyers feared that it would be too easy for employees to make frivolous reports of wrongdoing and then hide behind the law. Sarbanes-Oxley was considered very employee-friendly when it first passed. While the law may be an improvement over previous laws, the results have been dismal for employees. It seems that the results that were feared did not come to fruition. Employees who blow the whistle aren't nearly as protected as many thought they would be, and succeeding through appeals has been almost impossible for whistleblowers. Critics of Sarbanes-Oxley say that employees who report suspected wrongdoing and are subsequently fired have little recourse. And the burden of proof is very high for whistleblowers under the current interpretation of the law. The Numbers Since Sarbanes-Oxley was enacted...