Whistleblowing and Sarbanes-Oxley Act
Use the Internet or Strayer Library to research instances of whistleblowing in publicly traded companies within the last 12 months.
Write a (3-4) page paper in which you:
- 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.
- Decide whether or not the whistleblower was justified in reporting the company’s actions. Provide a rationale for your response.
- Examine the extent to which the whistleblower would be protected under the Sarbanes-Oxley Act. Justify your response.
- Use at least two (2) quality resources in this assignment. Note: Wikipedia is not an acceptable reference and proprietary Websites do not qualify as academic resources.
The specific course learning outcomes associated with this assignment are:
- Determine the underlying causes for passage of the Sarbanes-Oxley Act and determine protections afforded to whistleblowers.
- Use technology and information resources to research issues in law, ethics, and corporate governance.
- Write clearly and concisely about law, ethics, and corporate governance using proper writing mechanics.
Whistleblowing and Sarbanes-Oxley Act In Publicly Traded Companies
Whistleblowers report the unlawful activities they discover in the organizations they serve or other organizations (Holt, 2008; Secunda, 2009). Many employers are inclined towards punishing whistleblowers that report their wrongdoing or raise particular concerns about them. The concerns may include bogus accounting, double-billing, improper coding or billing, offering bribes, and over-charging (Bagley, 2013). Whistleblowing puts the careers of those who do it in jeopardy. This essay explores whistleblowing in the light of the Sarbanes-Oxley Act.
Read also Publicly Traded Companies’ GAAS, PCAOB, COSO, and GAAP Audit Requirements
The typical whistleblower reveals the information he or she discovers or comes across out of own volition. The whistleblower volunteers the information selflessly: devoid of self-serving interests. The whistleblower is committed to the public good as well as public interest. Besides, the whistleblower volunteers the information in utmost good faith. Notably, unlike the whistleblower, informants partake in the illegal or immoral activities that they report. Unlike informants, whistleblowers do not utilize the disclosures they make to clarify own roles or lessen own liability. Those who are legally obligated to inform cannot be taken as being whistleblowers because the disclosures they make are not motivated by ethical considerations but a mandate.
One of the executives serving J. P. Morgan Chase Bank and J. P. Morgan Securities LLC PRNewswire, 2015).
The disclosure by the executive had various effects on J. P. Morgan Chase Bank and J. P. Morgan Securities LLC. First, the fine decreed against them hurt their profits. Second, their knowledge that their employees can disclose any fraudulent activities they may partake in to SEC or related authorities have impacted on how they operate. For instance, they are now keen on affording clients the requisite information to formulate informed decisions regarding own investments (PRNewswire, 2015).
Third, the disclosure compromised the trust that the clients of the subsidiaries had in them previously. It is expected that the disclosure will see the subsidiaries enhance own governance policies to make certain that internal fraud does not happen in future. The SEC and Labaton Sucharow LLP have kept the identity of the whistleblower confidential to date (PRNewswire, 2015). Consequently, the executive is unlikely to suffer any ill-effects of his whistleblowing act. The executive may gain monetarily by filing a whistleblower award from the SEC.
The act was wholly justified. First, it helped protect the clients of J. P. Morgan Chase Bank and J. P. Morgan Securities LLC. Second, it was justified since it had the potential of enhancing the J. P. Morgan’s organizational sales culture. Third, it was justified since the law allows for and even persuades whistleblowing on SEC-listed companies’ fraudulent engagements. Fourth, the SEC Whistleblower Program allows for and even persuades whistleblowing on SEC-listed companies’ fraudulent engagements (PRNewswire, 2015). Notably, the program offers various incentives, as well as protections for whistleblowers (Holt, 2008; Secunda, 2009). The program offers varied opportunities to whistleblowers to provide disclosures anonymously and earn considerable monetary awards irrespective of their nationalities according to PRNewswire (2015).garding various forms of frauds: wire fraud, mail fraud, violation of specific SEC regulations or rules, bank fraud, shareholder fraud or securities fraud (Bagley, 2013).
The Sarbanes-Oxley Act obligates publicly traded firms to institute internal fraud reporting platforms and procedures for use by those wishing to report their doubtful practices anonymously. Based on the act, the firms are legally barred from harassing, suspending, demoting, or discharging whistleblowers who report evidence of organizational fraud lawfully. Those who punish or retaliate against the whistleblowers are criminally liable for acting in breach of the act (Bagley, 2013). The retaliatory acts envisaged under the act include staff layoff or discharge, staff blacklisting, demotion, pay reductions, wage withholding, denial of benefits, harassment, intimidation, and staff reassignment to inappropriate posts or positions. The remedies available to whistleblowers under the act include being rehired, benefit restoration, and settling of owed wages and interest.
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