Over the past century, securities fraud and other fraudulent activities involving publicly traded companies have cost investors – and often taxpayers – trillions of dollars. Such misconduct has also fueled major economic crises, including the 2008 financial crash. That catastrophe led to the passage of the Sarbanes-Oxley Act (“SOX”), a sweeping federal law that focused on preventing, uncovering, and punishing securities fraud and related illegal activities.
Like many other federal agencies, the SEC relies on courageous whistleblowers to report suspected illegal acts, so that it can investigate and pursue enforcement.
More often than not, whistleblowers work for the companies that are violating securities laws. SOX contains robust anti-retaliation provisions that protect whistleblowers and provide compensation and other relief if their employers are found to have engaged in prohibited retaliation.
Those considering reporting their employers’ SOX violations should consult an experienced whistleblower attorney before doing so. Meanwhile, here are five key things to know about whistleblowing under the Sarbanes-Oxley Act.
One: Companies, Conduct and Whistleblowers Covered By SOX
The rules and requirements of Sarbanes-Oxley, including whistleblower protections, apply to all publicly traded domestic companies, subsidiaries of publicly traded companies and nationally recognized statistical ratings organizations (such as Moody’s Investors Service Inc. or Standard & Poor’s Global Ratings Service).
Section 806 of SOX prohibits retaliation against employees or contractors of Sox-covered companies who engage in protected conduct – that is, individuals who provide information to a supervisor, a federal agency, law enforcement, or Congress that they reasonably believe the employer is engaging in, has engaged in or is imminently about to engage in:
- Securities fraud
- Mail, bank or wire fraud
- A violation of any federal law that relates to fraud against shareholders
- Violations of any SEC rule or regulation
Two: Prohibited Retaliation Under SOX
SOX prohibits any adverse employment action against an employee or contractor who engages in protected conduct as outlined above. Adverse actions may include:
- Discharge
- Demotion
- Suspension or other discipline
- Threats
- Harassment
- Reassignment that affects prospects for promotion
- Reduction in pay or hours
- Any treatment that singles out a whistleblower in the terms and conditions of employment as compared to non-whistleblowing employees
Three: Proof of Retaliation Required for a Successful SOX Retaliation Claim
To prevail in SOX whistleblower retaliation cases, employees must prove:
- They engaged in protected conduct;
- Their employers knew they had engaged in such activity;
- Their employers took adverse employment action against them; and
- The protected whistleblowing activity “was a contributing factor in the unfavorable personnel action.”
Once an employee shows that their whistleblowing was a “contributing factor” in the employer’s unfavorable employment action, the employer can defeat the claim only if it “demonstrates by clear and convincing evidence that the employer would have taken the same unfavorable personnel action in the absence of that behavior.”
Four: How and When to File a SOX Retaliation Claim
If you believe you’ve experienced unlawful retaliation under Sarbanes-Oxley, you can file a complaint with the federal Occupational Safety and Health Administration (OSHA). You must file the complaint within 180 days after you first experience or become aware of the prohibited retaliation. Note: this is a short time period, making it important to act quickly to maintain a claim under SOX, preferably with the assistance of an attorney.
Once OSHA receives a complaint, it will review its validity and investigate the alleged retaliation. If the evidence supports your claim of retaliation, and an employer settlement isn’t possible, OSHA will grant various forms of relief and damages. If OSHA doesn’t issue a final decision within 180 days after it receives your complaint, you can file a retaliation claim in federal court.
Five: Remedies and Damages Available for Unlawful SOX Retaliation
If you prevail in your SOX whistleblowing claim, the relief and remedies you may receive include:
- Reinstatement
- Back pay
- Front pay
- Payment for lost benefits
- Special damages, including damages for emotional distress, mental anguish and impairment of reputation
- Attorney fees, expert witness fees and costs
While Sarbanes-Oxley doesn’t provide rewards for reporting unlawful securities-related activities, such compensation may be available through the SEC Whistleblower Program that was established under the Dodd-Frank Act.
Halunen Law: SEC Whistleblower Attorneys
At Halunen Law, we have the utmost respect for whistleblowers who report unlawful activities that defraud shareholders, investors and the general public. Our SEC whistleblower attorneys fiercely protect the rights of those who report misconduct in the securities industry, defend them against prohibited retaliation and fight to get them the maximum amount of compensation available for their courageous efforts.
If you feel you’ve experienced illegal action in your workplace, we encourage you to submit a Case Review Form to our firm. One of our attorneys will review your information, and you’ll receive a response from our firm in a timely manner. There is no charge for this confidential process. And, if we take your case, as a contingency-based law firm, there is no cost unless we win.
We’re here to help you navigate your lawful rights and ensure you get the treatment you deserve. Together, we can hold employers accountable and create a fairer workplace for everyone.
A Partner at Halunen Law, Susan Coler is a member of the Halunen Law False Claims Act (FCA)/Whistleblower Practice dedicated to litigating False Claims Act and other whistleblower cases across the country. She represents whistleblowers who challenge illegal corporate conduct, particularly fraud against the government.
At 
(Josh) Newville
