Online Custom «Whistleblowing and Sarbanes-Oxley» Essay Sample
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In its essence, whistleblowing is the attempt of a current or former employee of an organization to call attention to misconducts or violations of the law perpetrated by the organization, which he or she believes are harmful to the interest of stakeholders and the public. Whistleblowers may report their concerns to someone within the organization through the internal whistleblowing mechanisms or to external regulators and law enforcement agencies. Due to devastating effects of external whistleblowing , organizations tend to discriminate or retaliate against the individuals identified or suspected to be whistleblowers, hence, calling for legal protection for whistleblowers through laws such as Sarbanes-Oxley Act which protects them at publicly traded organizations is very essential. Thus, this essay would provide the key characteristics of a whistleblower describe some recent case of whistleblowing in one of the companies and justify the extent to which the whistleblower would be protected under the Sarbanes-Oxley Act.
Key Traits of a Whistleblower and a Recent Whistleblowing Case
The individuals who turn out to be the whistleblowers possess some unique traits. Alford (2001), for instance, argues that corporate whistleblowers are somehow loyal to their personal principles of honesty and integrity. They find it difficult to cope with their organizations when they deviate from their moral or professional responsibilities to the stakeholders and the general public. Furthermore, the whistleblowers are tenacious and courageous individuals who willingly run the risk of deleterious consequences of retaliation by the employer.
A recent case of whistleblowing involved Deltek Inc. and its former employee Gunther. She was working as a financial analyst there and reported to the company’s general counsel and afterwards to the Security and Exchange Commission that the enterprise was committing a fraud by subjecting the invoices for telecommunication services to baseless disputes in order to conceal the budget deficts and unsteady financial condition at the IT department. As a result, the whistleblowing act had the detrimental effects on the employee and Deltek Inc. Following the investigation carried out by the company and conclusion that there were no evidences of fraudulent activities, Gunther suffered a mistreatment and harassment by her colleagues and supervisors. Subsequently, she underwent mental stress which forced her to take a medical leave. Hence, an ineffective protracted settlement of negotiations for her resignation from the company was ensued. Months later, she returned to work for the company but was terminated on grounds of displaying a confrontational behavior during a meeting. Thus, a global software provider was indicted for retaliation against the whistleblower in contravention of provisions of the SOX Act. On May 20, 2016, a Fourth Circuit Court forced the company to pay Gunther a four months front-pay and $30, 000 as a reimbursement for tuition benefits (The National Law Review, 2016).
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Justification for Whistleblowing
Although Gunther’s whistleblowing allegations were found to be erroneous, my position is that she was justified in reporting her perceived fraud by the company. According to Shaw (2011), a whistleblowing act is morally acceptable if it is done from a pertinent moral intention. It must be inspired by an individual’s desire to uncover an undue harm, illegal, or unethical activities or conducts that jeopardize the public good or the purpose of existence of the company. The desire to draw public attention or to gain from the act does not justify the whistleblowing. Judging from the facts of the case, it is apparent that Gunther’s act was based on moral convictions and a sense of duty to the company’s stakeholders as opposed to the pursuit for vengeance or personal advancement, thus, making her a genuine whistleblower. Furthermore, an external whistleblowing is justified only after internal whistleblowing procedures are exhausted. It should be noted that Gunther first reported her concerns to the company’s general counsel beefore the Securities and Exchange Commission. Eventually, her whistleblowing act was therefore justified.
Protection under the Sarbanes-Oxley Act
Gunther, as a participant of whistleblowing,is protected by the Sox Act. Section 806 of the act provides a legal protection to employees of publicly traded firms who uncover the offenses stipulated by the federal laws. If a whistleblower is convinced that he or she has been subjected to retaliatory or adverse treatment by due reporting a misconduct or violation of law by an organization, he/she can institute a private action against the organization to demand a reinstatement and compensation in the form of back pays, legal fees, and costs incurred (Martin, Hoffman, and Casey, 2004).
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In addition, the whistleblower can seek special damages, for example, reparation for emotional damage suffered. The Occupational Safety and Health Administration (OSHA) has the mandate to oversee the whistleblowing cases that fall under the SOX Act. Admittedly, a whistleblower’s complaint must initially be filed with OSHA. If the agency does not reach a resolution with the stipulated time, the complaint can then be filed in a federal district court (Martin et al., 2004). Accordingly, the whistleblower is expansively protected from the adverse actions from the employer.
In summary, the whistleblowers should be stimulated by belief in moral and professional responsibility to organization’s stakeholders and the public to expose the illegal or unethical activities of an organization. Besides, a whistleblowing act has moral justification if it has a moral intention. Furthermore, an external whistleblowing should be preceded by the exhaustion of internal whistleblowing mechanisms. In some cases whistleblowing can be ruinous to an organization and this gives a rise to instances of retaliation against the employees that eventually become the whistleblowers. Thus, they badly need Section 806 of the Sox Act to protect them from retribution by their employer or organization.
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