Whistleblowers Protected by the Sarbanes-Oxley Act: SOX Whistleblowers

Sarbanes-Oxley Act
Sarbanes-Oxley Act

Who is protected under SOX’s whistleblower-protection provision?

The whistleblower-protection provision of SOX protects:

  • employees, officers and agents of publicly traded companies

  • employees of

  • employees of contractors or subcontractors of public companies, including

  • employees of nationally recognized statistical rating organizations (as defined in section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c).

There are, however, some limitations on SOX coverage for employees of contractors of publicly traded companies:

  • “Contractor” is limited to business relationships where “performance of a contract will take place over a significant period of time.”

  • SOX “protects contractor employees only to the extent that their whistleblowing relates to ‘the contractor … fulfilling its role as a contractor for the public company, not the contractor in some other capacity.’” In other words, SOX protects a contractor employee who is in a position to detect and report securities violations — for example, the lawyers and accountants in the Enron scandal who were either directly or indirectly witness to the fraud.

  • SOX does not cover contractor employees who experience retaliation that is unrelated to the provision of services to a public company. A contractor’s fraudulent practices do not become subject to § 1514A merely because that company incidentally has a contract with a public company.

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