Sarbanes-Oxley Act of 2002

Congress enacted the Sarbanes-Oxley Act (SOX) in 2002 to protect investors and public interest by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws.

SOX is organized into eleven titles as follows:

  1. Public Company Accounting Oversight Board
  2. Auditor Independence
  3. Corporate Responsibility
  4. Enhanced Financial Disclosures
  5. Analyst Conflicts of Interest
  6. Commission Resources and Authority
  7. Studies and Reports
  8. Corporate and Criminal Fraud Accountability
  9. White-Collar Crime Penalty Enhancements
  10. Corporate Tax Returns
  11. Corporate Fraud and Accountability

SOX contains both a civil and a criminal whistleblower provision.

Civil.

Section 806 of the act protects employees of publicly traded companies who blow the whistle on fraud against shareholders and violations of securities laws. This section was amended by the Dodd-Frank Act to double the statutory filing period for SOX retaliation complaints from 90 to 180 days and to extend coverage to include subsidiary entities of publicly traded corporations.

“SEC. 806. PROTECTION FOR EMPLOYEES OF PUBLICLY TRADED COMPANIES WHO PROVIDE EVIDENCE OF FRAUD.

(a) IN GENERAL.—Chapter 73 of title 18, United States Code, is amended by inserting after section 1514 the following:

Ԥ 1514A.

(a) WHISTLEBLOWER PROTECTION FOR EMPLOYEES OF PUBLICLY 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)), 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

C. 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.

(b) ENFORCEMENT ACTION.—

(1) IN GENERAL.—A person who alleges discharge or other discrimination by any person in violation of subsection (a) may seek relief under subsection (c), by—

A. filing a complaint with the Secretary of Labor; or

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.—

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.

(c) REMEDIES.—

(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.

(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

C. compensation for any special damages sustained as a result of the discrimination, including litigation costs, expert witness fees, and reasonable attorney fees.'”

Criminal.

Section 1107 makes it a felony for anyone to knowingly retaliate against all persons and entities.

“SEC. 1107. RETALIATION AGAINST INFORMANTS.

(a) IN GENERAL.—Section 1513 of title 18, United States Code, is amended by adding at the end the following:

‘(e) Whoever knowingly, with the intent to retaliate, takes any action harmful to any person, including interference with the lawful employment or livelihood of any person, for providing to a law enforcement officer any truthful information relating to the commission or possible commission of any Federal offense, shall be fined under this title or imprisoned not more than 10 years, or both.'”

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