...Are the Dodd Frank Act Whistleblowing Measures Effective? Whistleblowing in the Financial Markets: Name: Professor: Course: Date: In the wake of the Global-Financial Crisis there have been various strategies employed to improve corporate governance, but the main question to ask will they work? The expansion of whistleblower bounties under s.992 of the Dodd-Frank Act 2010 (Dodd-Frank Act) has been one such measure. This measure has been identified as significantly controversial, because it is superseding the traditional internal reporting processes (Schuman & Keating, 2011). The Dodd-Frank Amendment Act that was introduced in 2011 was an attempt to mitigate the potential harm that offering bounties to whistleblowers may have; albeit it seems to be side-lined through consultation processes. Thus, the following research will explore if the bounty provisions are a necessary and effective tool to increase supervision within financial institutions. The concept of “Whistleblower” needs to be identified before moving on in this discussion. The concept relates to a company insider reporting to an appropriate body when there are actions that are breaching the law or acting unethically (Kohn, 2011). Thus, whistleblowing and corporate governance are intrinsically linked. The indications are that the use of monetary incentives is not the most effective model to enforce whistleblowing as an effective deterrent, which can be supported by the poor statistical reception under the...
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...Whistleblowing and Sarbanes-Oxley Assignment 1 LEG 500/Professor Augustine February 3, 2014 A Whistleblower by definition is someone who exposes a person or organization engaged in an illicit activity. Whistleblowers expose those that commit misconduct or an alleged dishonest and/or illegal activity within an organization. The infraction must be a violation of a law, rule or regulation and/or a direct threat to public interest, like fraud, health and safety violations and corruption. In almost every part of society the way information is given becomes the most important objective in the fight against misconduct and malpractice. Obtaining information can be difficult as those involved often make it their best interest in hiding the information from the public and authorities. It really helps to receive information regarding the wrongdoing from someone who has actually witnessed the incident, willing to come forth with intricate details. Whistleblowing can provide resolutions to certain situations by opening thought to be nonexistent and disclosed information sources and connections. Reasons behind whistleblowing can vary. Such as, when someone observes the wrongdoing within their workplace and requests to speak to a figure head of the organization to their morals. Whistleblowing becomes a much stronger case when it involves a large portion of the public. The publicly traded company that I researched was the whistleblowing of Bernard L. Madoff Securities LLC. The company...
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...to employees to commit fraud. Policy like Whistblowing had changed organizations. The article “Whistleblowing and Good Government” is describe how one company should implementing and researching the best method of preventing fraud within company internally and externally. This article also defines the term Whistleblowing, and how to develop the policy and suggesting the best practice that company could use as resources. Article Summary: Over the pass decade there was numerous, both corporate and Government sector had committed some type of fraud that cause company billion dollars a year across the United States. One of the most famous case where higher managers at World Bank took over $2 millions of dollar involved in kickbacks, payoffs, bribery, embezzlement and collusive bidding. With the increasing of fraud many company and non-profit began to implement the SOX within their organization. One of the most important tools of SOX is Whistleblowing policy, the act of reporting wrongdoing to another within the organization internally or externally parties. In 1989 The Whistleblower Protection Act was passed and amended in 1994, to protect any Federal Employees from a worked place from retaliation when they disclosed any fraud. The article discussed the reason why organization, non-profit, universities, and government entities are considering implementing whistleblowing practices due to high fraud and abuse of...
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...misbehavior and incidents to their immediate supervisor, union representative, or human resources department) or external means (i.e., going outside their organization to, for example, a third party ombudsman, an external hotline, or an applicable government regulatory agency related to the type of wrongdoing behavior. Internal whistleblowing mechanisms for public companies must comply with the provisions of the Sarbanes-Oxley Act of 2002 (SOX). Two of the many corporate governance provisions of SOX place whistleblower-friendly requirements on issuers. SOX section 301 requires the audit committee of every issuer to establish procedures for the receipt, retention, and treatment of complaints regarding accounting, internal control, or auditing matters, and to maintain the anonymity of employee complaints regarding accounting and auditing matters (i.e., the establishment of a whistleblower hotline). SOX section 806 provides protection for employees who blow the whistle against their employer, an anti-retaliation provision subsequently reinforced by the Dodd-Frank Wall Street Reform and Consumer Protection Act. Programs to encourage external whistleblowing typically provide an incentive to the would be whistleblower, either in the form of monetary awards, protection from retaliation, or both. Researchers have identified various issues that are most...
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...Assignment 1: Whistleblowing and Sarbanes-Oaxley Due Dana Martin Prof. Christina Williams LEG 500 January 25, 2015 JP MORGAN Chase Bank In February 2014, JP Morgan Chase bank admitted that for over 10 years they were submitting false information about countless amounts of mortgages for insurance by the Federal Housing Administration or the Department of Veteran Affairs that did not qualify for government guarantees (reuter.com). Whistleblower, Keith Edwards was employed with JP Morgan from 2003 to 2008 and was an assistant vice president whom supervised the government insurance unit. After “outing” the helpful information, he was paid $63.9 million for providing tips that led to JPMorgan’s agreement to pay $614 million and tighten oversight to resolve charges that it defrauded the government into insuring flawed home loans. In cases like this, Edwards took on an issue that not only affected the company and those taking part, but the government. In a scenario like this one, if the government steps in to side with the whistleblower it becomes a very strong argument for the person that provides the information leading to seize of such activity. (reuters.com/article). In this case the government took significant losses where they had to cover millions of dollars from evictions and foreclosures nationwide. In 2013, Edwards had originally sued under the False Claims Act, which lets people sue government entities for defrauding taxpayers, but later the Justice Department...
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...Week 3 Assignment 1: Whistleblowing and Sarbanes-Oxley Shirmere N. Gardner Dr. Susan Gerber LEG 500: Law, Ethics & Corporate Governance January 25, 2015 Abstract This text will examine the key characteristics of a whistleblower, as well as the details surrounding the JPMorgan whistleblowing event. The extent to which whistleblowers are protected under the Sarbanes-Oxley Act (SOX) will also be elaborated. Key Characteristics of a Whistleblower Whistleblowers are individuals who choose to report unethical and illegal activities. Some may work for various organizations such as non-profits and government agencies. Whistleblowing empowers employees to adhere to ethical principles and speak up for things taking place that are unethical, which may affect consumers, citizens or other employees. Such information may be disclosed to company officials, government authorities, and the media. Some of the key characteristics of a whistleblower are that they are altruistically motivated, utilitarian, uninterested in altering their behavior and they allow their own attitudes and beliefs to guide them. Most whistleblowers are often well-educated and hold professional positions (Wines, 2005). JP Morgan Whistleblower According to a Reuters article a JPMorgan whistleblower was compensated $63.9 million in a mortgage fraud deal. “Keith Edwards, a Louisiana resident, had worked for JP Morgan or its predecessors from 2003 to 2008, and had been an...
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...Whistleblowing and Sarbanes-Oxley Whistleblowing is the disclosure by the employee of the company or organization of illegal practices that are taking place under the control of the employer. The information is disclosed to rival companies of organizations that are able to effect action against the company. Whistle blowing is determined most by the psychology of the individual and the intensity of the situation they are uncovering. Some employees are privy to the illegal practices of the companies, but they are not motivated to disclose because of lack of interest. It is situational rather than being personal because if an individual found that the actions were very wrong and very sure that they happened they would disclose. There have been laws enactments that will ensure that the employees are protected from whistleblowing and that every public company should have a whistle blowing by employee process in place; McGill whistle blown on NEON and NSF conspiracy, to evade the prohibition against payment of certain costs to Government grantees such as, foreign travels. The audit which was later overruled. McGill gave information on non-procedural overruling on the audit which violates the government’s standards of auditing. It was very proper for McGill to have whistle blown on illegalities in these organizations. The public is losing millions of shillings through such illegal practices and whistleblowers are there to save the government of further losses. He also exposed the...
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...Whistleblowing and Sarbanes-Oxley Due Gbemisola Salako Dr. Oris Guillaume LEG 500 – Spring/ 2015 April 21, 2015 Question # 1- Describe the key characteristics of a whistleblower, and briefly summarize one (1) researched instance of whistleblowing in one (1) publicly traded company within the last 12 months. Include the details of the issue that the whistleblower reported and the effect of the whistleblower’s actions on both the whistleblower himself and the company. Whistleblowing can be described as an instance whereby an employee reports suspected wrongdoing such as corruption, mismanagement or corruption at work. It is referred to as making a disclosure in the interest of the public which can occur in a private enterprise or government agency (“Whistleblowing,” 2015). A whistleblower is an individual or employee who reports wrongdoing within an organization. This person draws attention to genuine abuses of power in government and businesses by decision makers. A whistleblower acts in accordance with perceived ethical or legal mandate (Halbert, Ingulli, & Frey, 2015). The key characteristic of a whistleblower is the willingness to sacrifice both professionally and personally to expose wrongdoing such as wastefulness, fraudulent practices and corruption in an organization. Persistence and the ability to assume personal risk are also characteristics of a whistleblower (Heumann, Friedes, Cassak, Wright & Joshi 2013). JPMorgan Chase & Co. was charged with...
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...Are organizations hindering employee whistleblowing? Marshall Dabney ACC-302 I. When reading the article “Are organizations hindering employee whistleblowing,” it mainly talked about fraud in a business. While talking about the different frauds in a business it also talked about ways that you can prevent fraud. The article basically looks at actions businesses can take to avoid accidently discouraging fraud reporting and instead promote whistleblowing. Using a third party admin. To oversee hotlines is considered the best practice that companies use to encourage whistleblowing. In 2009 a study based on interviews of more than 80 managers and published in Auditing: A Journal of practice and Theory, found that employees are more hesitant to report possible fraud to outsiders as opposed to using internal company reporting programs and resources, even if those internal programs don’t follow best practices similar to the external hotlines. Companies want to retain the use of an external reporting system, such as a hotline administered by a third party, rather than bringing it in house. It would be more cost effective and may offer whistleblowing if the third party maintained the hotline. A hotline should be something as a part of the company and not looked at something that’s separated. The name for your hotline should be something that your employees should feel comfortable using at any time and not just for emergencies. SOX requires audit committees of publicly traded...
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...Whistleblowing and Sarbanes-Oxley Lulu Rodriguez-King LEG 500 – Law, Ethics, and Corporate Governance Strayer University Prof. Karina Arzumanova January 25, 2015 Whistleblowing and Sarbanes-Oxley A whistleblower is a person who exposes misconduct, alleged dishonest or illegal activity occurring in an organization. Whistle blowing empowers workers to speak up for principles and ethics and shine a light on unethical practices that can cause negative consequences for consumers, citizens and colleagues. Internal whistle blowing can be very valuable for an organization; reports of misconduct, given early and taken seriously, can avert disaster. Alternately, public whistle blowing has toppled and shamed many organization. Research finds that employees who are female, employees who are more satisfied with their jobs, and employees with longer tenure are somewhat more likely to say that they have reported observed misconduct. A supportive climate for whistle blowing is associated with both intentions to report and actual reporting behavior. Many internal whistleblowers fear retaliation from within their organizations for whistleblowing. Retaliation deters future whistleblowers; therefore, organizations need to design systems to both protect reporters and punish retaliators (Trevino). Recent Example of Whistleblowing While working as Director of Technical Accounting Research and Training in the Finance and Accounting department at Halliburton...
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.... Ethics-Whistleblowers Laura Dove Bus 670 Instructor Starcher July 18, 2011 Ethics/Whistleblowers In this ever-increasing society, businesses are becoming more competitive to increase the success of the organization. These organizations must ensure their operations adhere to the specific regulatory guidelines set forth by the government. For this reason, organizations place emphasis on proper management and preventive measures to alleviate risks of legal liability. With adequate knowledge active steps can be taken to eliminate risk factors and reduce the affects of any possible risks. Some critics believe that businesses should adhere to an ethical or a socially responsible behavior that is higher than the law. Organizations and or employers tell us that one way to increase compliance with the company’s core ethical values is to convince the staff that their best interest and the firm’s are met by acting ethically (Mallor, Barnes, Bowers, & Langvardt, 2010). Moreover, if the company’s ethical values are in place, the action to report unlawful behavior should not be as difficult. Subsequently, individuals labeled as whistleblowers in the workplace has a challenging, ethical and or morally, as well as lawful thing to do. The intent of this paper is to give a brief synopsis of ethics, whistleblowers, dilemmas of whistleblowers, legal issues involved with individuals labeled as whistleblowers, to include the government and society (The Occupational...
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...Whistleblowing and Sarbanes-Oxley Act Student Name College or University Name LEG500 – Law, Ethics, and Corporate Governance Professor’s Title Date Whistleblowing and Sarbanes-Oxley The federal government passed and put into law the Sarbanes-Oxley Act of 2002 (SOX) to primarily protect whistleblowers from retaliation for reporting corporate fraud and financial malfeasance to the government. The negligence became apparent in the 1990’s when corporations such as Enron, HealthSouth, Tyco and WorldCom were found to have grossly overstated their earnings. This cost billions of dollars in losses to shareholders and caused the near-collapse of the stock market (Prentice, 2010, p. 17). The companies were able to hide, scam or misrepresent their earnings due to the dot-com boom, soaring investments, and auditor fraud. The Sarbanes-Oxley Act contains many sections, sub-sections and creation of other agencies to enforce it. It was a sweeping change to standard reporting practices and was created to restore investor confidence, hold corporations and auditors financially and criminally accountable, and protect whistleblowers. Prior to the creation of SOX the whistleblower had no protection from retaliation by the organization. Whistleblowers had fears of criminal prosecution, bodily harm and job loss if they reported the misdeeds of their employer both publicly and privately. The Sarbanes-Oxley Act of 2002 redefined the whistleblower. An examination of the characteristics of a whistleblower...
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...Assignment 1: Whistleblowing and Sarbanes-Oxley The key characteristics of a whistle-blower are honesty and fearlessness. Whistle-blowing requires a person to have tenacity and a fighting spirit because those who take the action to Whistleblowing are in for a long, tough road. Whistle-blowers are often put under public scrutiny, shunned by co-workers and communities, and go through long strenuous legal battles before seeing any justice served. Whistleblowers also must combat retaliation from their employers, such as being fired or put on work suspension. The first case of whistle-blowing occurred nearly over 200 years ago. By a unanimous vote, The Continental Congress enacted the first whistle-blower protection law in the United States on July 30, 1778. The Continental Congress was moved to act after an incident in 1777 when Richard Marven and Samuel Shaw “blew the whistle” and suffered severe retaliation by Esek Hopkins, the commander-in-chief of the Continental Navy. Congress declared that the United States would defend the two whistle-blowers against a libel suit filed against them by Naval Commander Hopkins. The Continental Congress also declared it the duty of all persons in the service of the United States, as well as all others who inhabit the U.S. to inform the Continental Congress or proper authorities of any misconduct, fraud or misdemeanors committed by any officers in the service of these states, which may come to their knowledge (Lipman, 2012). A publicly...
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...WHISTLEBLOWING Whistle blowing adalah tindakan seorang pekerja yang memutuskan untuk melapor kepada media, kekuasaan internal atau eksternal tentang hal-hal ilegal dan tidak etis yang terjadi di lingkungan kerja. Hal ini merupakan isu yang penting dan dapat berdampak buruk, baik kepada individu tersebut maupun organisasi yang dilaporkan (Vinten, 1994). Menurut Vardi dan Wiener (1996), tindakan ini termasuk tindakan menyimpang karena menyalahi aturan inti pekerjaan dalam perusahaan yang harus dipatuhi oleh semua pekerja. Sedangkan menurut Moberg (1997) tindakan ini dikategorikan sebagai pengkhianatan terhadap perusahaan. Whistle Blowing dalam perusahaan (misalnya atasan) dapat disebut sebagai perilaku menyimpang tipe O jika termotivasi oleh identifikasi perasaan yang kuat terhadap nilai dan misi yang dimiliki perusahaan, dengan kepedulian terhadap kesuksesan perusahaan itu sendiri. Sedangkan tindakan whistle blowing yang bersifat ”pembalasan dendam” dikategorikan sebagai perilaku menyimpang tipe D karena ada usaha untuk menyebabkan suatu bahaya. Sementara itu, beberapa peneliti menganggap whistle blowing sebagai suatu bentuk tindakan kewarganegaraan yang baik (Dworkin & Nera, 1997), harus didorong dan bahkan dianugerahi penghargaan. Namun, whistle blowing biasanya dipandang sebagai perilaku menyimpang. Para atasan menganggapnya sebagai tindakan yang merusak yang kadang berupa langkah pembalasan dendam yang nyata (Near & Miceli, 1986). Para atasan berpendapat bahwa pada...
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...Is whistle blowing appropriate? Whistle blowing legislation and organizational whistleblowing policies are intended to reduce the wrongdoing in organizations and protect the person that reports these wrongdoings. It is easier for employees to report wrongdoing when the issue of of a legal nature, as compared to wrongdoings that have an ethical issue to them. The legal wrongdoing is clearer and therefore the whistleblower has less confusion in the matter. Additionally, the whistleblower may feel that they are legally responsible if they do not report the behavior or incident (Tsahuridu & Vandekerckhove, 2008). Ethical wrongdoing is mercurial, leaving the issue open for translation, if it is not clearly stated as wrong in the company policies. Not all issues can be clearly covered even in a comprehensive policy. This leaves employees unclear about the situation and the appropriate action to take. Individuals in the workplace should feel safe reporting potential wrongdoing regardless of exact knowledge of its nature. Any circumstance that appears to be unethical to an individual should be reported and is appropriate. This will assist the individual in continuing to be a moral individual and support the development of an ethical organization (Alleyne, Hudaib, & Pike, 2013; Badaracco & Ellsworth, 1989). Does whistle blowing violate company loyalty? Whistleblowing does present itself as a conflict between the organization or organizational leader and...
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