Free Essay On Whistleblowing And Sarbanes-Oxley Act

A civic rights activist coined the term whistleblowing to avoid using the derogative terms such as informant of snitch; it was derived from a referee’s action of blowing a whistle to indicate foul play. A whistleblower is, therefore, the person or employee who exposes illegal activities, misconduct, and even dishonesty in an organization. The defining attributes of whistleblowers is the fact that they make their allegations known, this is either to external authorities such as law enforcement agencies and the media among others or internally within the organization to relevant officials.
The year 2014 had so many incidences of whistleblowing that it was even named “The year or Whistleblowers” In this paper, we shall examine the whistleblowing by Bill Lloyd, a former employee of MassMutual Finance group in 2014. Bill Lloyd is 56 years old and had worked for the Corporation for 22 years as an agent. Due to his concern for his customers, he decided to report an irregularity in where his company trained the agents to give the customers false guarantees. He reported it internally, but the company took no action to rectify their error. In addition, the industry’s self-regulatory authority obtained the evidence and still failed to act on it. Finally, he decided to go to the Securities and Exchanges Commissions (S.E.C) which then commenced its investigation. The company was fined 1.6 million dollars that relatively is an insignificant punishment but for the interests of the investors or the customers had to remain so. Lloyd, on the other hand, obtained 25 percent of the fine, 400, 000 dollars. While whistleblowers have protection under the law, the law is limited in some aspects. He recalls being treated like a leper and isolated by his fellow employees to the extent that he had to quit and change firms.
I consider Lloyds decision to have been both morally and ethically justified. From his actions, it is plain that his primary concern was the customers and the investors rather than a misguided sense of justice. In fact, the S.E.C announced that he had done everything possible to have the problem dealt with internally. Furthermore, the solution, which was arrived at, had the MassMutual agreeing to lift their prohibitive caps in addition to paying the penalty; this meant that the problem was resolved without the investors losing their money.
Sarbanes-Oxley Act was legislated in 2002 by the Congress specifically for protecting whistleblowers of the publicly traded corporations who make reports to the S.E.C or any provision of the federal laws in regard to fraud against the shareholders. The law bans any adverse changes to the employee’s terms and conditions. The Act states that the investigation must not include any threats or actual, demotion, discharge, harassment or suspension against the whistleblower. In action, Section 1107, makes it a criminal offense if the employer retaliates against the whistleblowers. The offense has a penal code that includes fines and even a sentence of up to 10 years in prison.
The remedies, that the act offers to the employees, are numerous including, rehiring, restoration of the benefits that were denied, the payment of the owed wages with interest included, and reinstatement to the senior position. Also, special damages are awarded for the losses incurred by because of the retaliation including damage to the professional reputation and emotional distress. Other remedies include an apology to the employee and litigation expenses incurred in any legal proceeding relating to that matter. In conclusion, I believe that Lloyd had more than adequate legal protection under the Sarbanes-Oxley Act. However, the act cannot actually force other employees to like him or even treat him as they did previously meaning that if he wanted such environment he had to leave.

References

Baynes, L. M. (2012). Just Pucker and Blow?: An Analysis of Corporate Whistleblowers, the Duty of Care, the Duty of Loyalty, and the Sarbanes-Oxley Act. St. John's Law Review, 10.
Nocera, J. (2014, August 18). The Man Who Blew the Whistle. The New York Times, p. 23.
Yeoh, P. (2014). Whistleblowing laws: Before and after Sarbanes–Oxley. International Journal of Disclosure and Governance , 235-243.