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Lessons From The First SOX Whistleblower Cases

The whistleblower protections contained in the Sarbanes-Oxley Act of 2002 are already creating a groundswell of employee complaints, with more than 300 whistleblowers claiming their employers retaliated against them for their allegations of corporate misconduct. While only a handful of claims to date have been decided on their merits, they offer important cautionary tales for corporations.

The Sarbanes-Oxley Act defines whistleblowing broadly. Complaints must be made either to someone “with supervisory authority over the employee”—rather than, for example, a coworker—or to someone working for the employer who has the authority to investigate, discover, or terminate the misconduct. This could include complaints made to a company’s auditor or outside counsel, who may then have independent obligations under the Act to report the wrongdoing “up the ladder.”

Whistleblowers also are protected for complaints made to government authorities,...

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