On July 30, 2002, President George H. W. Bush signed into law the Sarbanes-Oxley Act of 2002, which he characterized as “the most far reaching reforms of American business practices since the time of Franklin Delano Roosevelt.”
The Sarbanes-Oxley Act of 2002 (“SOX”), was enacted by Congress in the wake of the colossal accounting frauds at Enron and WorldCom. SOX has transformed the legal landscape for employees who work at publicly traded companies. SOX’s whistleblower-protection provisions provide a powerful legal mechanism for employees who suffer retaliation for their reporting of accounting fraud, misleading statements to the investing public, and other financial or securities-related misdeeds.
The successful representation of Sarbanes-Oxley whistleblowers necessitates the ability to analyze and assert claims within a 180-day deadline for the filing of claims with the Department of Labor (DOL), which is the federal agency that first hears all SOX whistleblower cases. And, both the DOL and the federal courts, which can accept jurisdiction after employees have first exhausted the DOL procedures, have very stringent requirements for bringing and proving of SOX whistleblower claims.
Sarbanes-Oxley only requires that the violated federal law relate to fraud against shareholders. That is, an employee who reports fraudulent conduct not directed at the shareholders will still be protected if the activities complained of, relate to fraud against shareholders. Under Sarbanes-Oxley, the employee is required only to have a reasonable belief that the company’s wrongdoing will sufficiently impact shareholders; certainty, is not a requirement.