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What is the Sarabanes-Oxley Act?

On Behalf of | Dec 27, 2022 | Employer Fraud, Whistleblower Protection

Enacted in the aftermath of Enron, WorldCom. and several other scandals, the Sarabanes-Oxley Act (SOX) of 2002 contains 11 sections that regulate how all publicly traded companies in the U.S. handle their accounting and record keeping. Also known as the “Public Company Accounting Reform and Investor Protection Act” or the “Corporate and Auditing Accountability, Responsibility, and Transparency Act,” different sections of the law address a wide range of issues, including disclosure, improper influence, reporting, assessment of internal control, and penalties for the attempted influence upon investigation. Section 806 explicitly addresses retaliation in fraud cases.

SOX protects whistleblowers

Under SOX, the Occupational Health and Safety Administration (OSHA) recently ordered Wells Fargo to pay $22 million for the wrongful discharge of an internal whistleblower. The senior manager in the commercial banking unit repeatedly voiced concerns to area managers and the corporate ethics line regarding price fixing and interest rate collusion. The company terminated the employee in 2019. It initially provided no reason for the dismissal and later said it was part of a restructuring process. Further investigation by the U.S. Department of Labor found that the whistleblower’s removal was inconsistent with Wells Fargo’s personnel decisions involving similar employees dismissed in the restructuring.

A record amount

The $22 million award was for back wages, front pay, lost bonuses and benefits, interest, and damages. The amount is the highest in the last six years. The following highest amount is $958,000 for retaliation toward a former employee and $1.04 million to two employees who cooperated with an OSHA investigation.