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Leg500 Assignment 1

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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 was a Wall Street investment company founded by Bernie Madoff whose sons blew the whistle in 2008 to SEC after Bernie confused to them that he had conned investors out of $64.8 billion. Madoff knowingly along with his accountants paid investors out of their own return instead of profits. Madoff was sentenced to 150 years in prison.
Yes I believe the Madoff brothers were justified in reporting what their father had shared with them. It was immoral and illegal what Bernie had done to all those investors involved and it showed them that their fortune was stolen and all a lie. However it is hard to determine just how much they knew prior to turning Bernie in. It is also a sad case for the entire family as not only will Bernie spend his remaining life in prison, he was ordered to pay over $170 billion in restitution. Also as result of this one brother has since committed suicide and the other died after years of battling mantle cell lymphoma.
The Sarbanes-Oxley Act of 2002 (“SOX”) contains significant protections for corporate whistleblowers. Given its diverse civil, criminal and administrative provisions, the statute may be considered, over time, one of the most important whistleblower protection laws.
The SOX's whistleblower protection provisions have no limit when it comes to giving legal resolution for employees terminated due to retaliation like other laws related to whistle blowing. There are also four other stipulations tied into whistleblowing protection along with providing job security to employees decide to come forth. The first, the law makes it a requirement that all publicly traded corporations create internal and independent “audit committees.” This serves a function of auditing establishing protocols of how to file internally confidentially and safely.
Secondly, SOX has created new ethical standards for attorneys who practice before the Securities and Exchange Commission (SEC). This requires attorneys, under certain circumstances, to blow the whistle on their employer or “client.”
Then, the SOX amended the federal obstruction of justice statute making retaliation a criminal act against those who were truthful, covering employers all over the nation.
Lastly, Section 3(b) of the SOX has a rule that enforces clause of the SOX. This section states that “a violation by any person of this Act [i.e. the SOX] . . . shall be treated for all purposes in the same manner as a violation of the Securities Exchange Act of 1934.” This section grants jurisdiction to the SEC to enforce every aspect of the SOX, including the various whistleblower-related provisions. It also provides for criminal penalties for any violation of the SOX, including the whistleblower-related provisions.
However, whistleblowers are not always protected by the SOX law. If the company survives the whistleblower may be seen as disloyal black balled by their current or future employers, making one's current job, or securing a new job, difficult.

Mowrey. Megan, (n.d). Mary Business Law Review, Vol. 1/Issue 2 Does Sarbanes-Oxley Protect Whistleblowers? The Recent Experience of Companies and Whistleblowing Workers Under SOX. Retrieved from
O’Donnell.Anne C. (n.d).Sarbanes-Oxley Whistleblower Protection Extended by Supreme Court Retrieved from
Vardi. Nathan. (September 3, 2014). The Madoff Tragedy Continues With Andrew Madoff's Death. Retrieved from

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