Employee Rights under the Sarbanes-Oxley Act

"The Sarbanes-Oxley Act of 2002 (“SOX”),
enacted by Congress in the wake of the colossal accounting frauds at Enron and WorldCom,
transformed the legal landscape for employees who work at publicly traded companies.

...Under SOX, high-level executives, attorneys, managers and accountants,
as well as lower level employees, who report corporate fraud
can seek redress against their employer’s retaliatory conduct.

Specifically, Sarbanes-Oxley grants protection to employees
expressing concern or disclosing information regarding corporate fraud.

To qualify for SOX protection, an employee must communicate his or her concerns
to a supervisor, federal agency, or any member of Congress.

An employee must simply have a good faith belief that the corporation or its employees
are in some manner violating the law.

Additionally, he or she must either report that behavior internally or externally,
refuse to participate in the behavior, or assist an official investigation of the illegal conduct.

Employees who have been retaliated against for making a SOX disclosure
may file a Sarbanes-Oxley claim against their employer.

The procedures and burdens of proof under Sarbanes-Oxley
are borrowed directly from the airline industry whistleblower regulations,
set forth at 42 U.S.C. § 42121(b).

Under this procedure, the employee is required to produce some evidence that whistleblowing
was “a contributing factor” in the challenged personnel decision.

The employer then has an opportunity to show by “clear and convincing evidence”
that it would have taken the same unfavorable personnel action
in the absence of the whistleblowing.

Under any analysis, the employer is at a distinct disadvantage
unless it has thoroughly and contemporaneously documented
the reasons for the discipline or discharge of the whistleblowing employee,
and can prove that the discipline or discharge
was consistent with that applied to non-whistleblowing employees.

...By invoking SOX protections,
employees do not forfeit their right to pursue any other claim they may have
for whistleblower protection under federal, state, or local law.

A case of a former vice president for an investment management company and chartered bank
illustrates the protection provided by SOX whistle-blower protection provisions."

http://www.gpo.gov/fdsys/pkg/USCODE-2011-title18/html/USCODE-2011-title18-partI-chap73-sec1517.htm
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"In Fraser v. Fiduciary Trust Co., 417 F. Supp. 2d 310 (S.D.N.Y. 2006),
the court held that the plaintiff sufficiently plead protected “whistle-blowing” activity.

In that case, an email sent by the plaintiff to the company president,
in which he reported “that the New York office’s decision to sell WorldCom bonds
from New York-based ERISA and trust management accounts
was not equally disseminated to all accounts firm-wide.”

The plaintiff wanted to communicate this information to all firm offices,
but was instructed not to do so by another company officer.

As a result, he alleged, the company’s Los Angeles office continued to hold WorldCom bonds,
resulting in “substantial losses in [LosAngeles]-ERISA and trust accounts holding WorldCom bonds.”

The plaintiff “characterized this conduct as a breach of fiduciary conduct
and evidence of a conflict of interest,”
and alleged that corporate officers retaliated against him for making the report.

The court found this sufficient
to satisfy the pleading requirement for a SOX whistle-blowing claim.

See also Hendrix v. American Airlines, Inc., 2004-SOX-23 (Dec. 9, 2004)
(finding protected activity where employee participated in investigation into theft of company property).

In conclusion, managers or employees that have knowledge of an inappropriate corporate activity
have a protected right to make a disclosure under Sarbanes-Oxley,
and if they experience retaliation, may file a Sarbanes-Oxley claim against their employer."

http://www.voicesforcorporateresponsibility.com/employeesrights.html