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Mar 17

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SOX Whistleblower Protection Extend to Certain Private Company Employees

The Supreme Court has held in the case of Lawson v. FMR LLC that the whistleblower protection available under the Sarbanes-Oxley Act of 2002 (“SOX”) properly extends to employees of privately held contractors and subcontractors who perform work for a public company.  Although the case in question was brought by employees of advisors to a public mutual fund, the ruling extends to other service providers, such as law firms and accounting firms.

Privately owned companies that serve publicly traded companies should examine their policies to ensure they are in compliance and provide protection against retaliation for employees who may whistleblow on activities at their public clients.  SOX’s whistleblowing provision concerns the broad areas of accounting, auditing, and internal accounting controls and provides widespread protection.  SOX Section 806 provides job security and monetary damages if retaliation occurs against an employee that reports anything that the employee reasonably believes may be a violation of any securities law, any rule of the Securities and Exchange Commission (“SEC”), or any other federal law. Section 1107 further complicates the issue by providing criminal and monetary penalties against individuals or companies that provide such retaliation, on top of the civil remedies the employee has through Section 806.

This article contains additional information regarding the rise in whistleblower retaliation cases and the benefits of using an independent outside vendor skilled in accounting and auditing.

About the author

Renee Howdeshell

Renee Howdeshell is a founding member of Fulcrum Inquiry, an accounting, finance and economic consulting firm that performs damage analyses for commercial litigation, forensic accountings, royalty & distribution audits, financial investigations, and business valuations. Ms. Howdeshell holds a degree in Finance and Marketing from the University of Virginia's McIntire School of Commerce and is a Certified Public Accountant (CPA) and a Certified Fraud Examiner (CFE). She has testified as an expert witness in federal court, CA state court and arbitration regarding the results of her work. She can be reached at (213) 787-4112 and her resume is available at www.fulcrum.com.

Permanent link to this article: http://betweenthenumbers.net/2014/03/sox-whistleblower-protection-extend-to-certain-private-company-employees/

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