Whistleblower Definitions by Sarbanes-Oxley (SOX), Dodd-Frank, First Claims Act (FCA) and the Whistleblower Protection Act (WPA)

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2.1.0. Whistleblower Definitions by Sarbanes-Oxley (SOX), Dodd-Frank, First Claims Act (FCA) and the Whistleblower Protection Act (WPA)

The FCA define whistleblowing as a qui tam action, which means the reporting of fraud committed against the US government[1]. WPA of 1989 define whistleblowing as reporting of wrongdoings in government institutions at the federal, state or local levels based on reasonable belief that unethical practices are ongoing, have occurred, or would likely to take place in the future. Dodd-Frank specifically sees whistleblowers as any person or group of individuals acting jointly to provide information relating to breach of securities laws to the Commission (SEC), in a manner established by rule or regulation by the Commission (SEC).” While the Sarbanes-Oxley Act (SOX) define whistleblowers as individuals “providing information about securities fraud, shareholder fraud, bank fraud, a violation of any SEC rule or regulation, mail fraud, or wire fraud.”[2]

          The definitions of whistleblowers and whistleblowing as presented by SOX, Dodd-Frank, FCA and WPA focused on reports made to the US government regrading financial fraud or related wrongdoings. Notably, these definitions neglected the financial and non-financial motives behind whistleblowing activities unlike UK’s PIDA, which emphasized ‘the public interest.’ Thus, whistleblowing in the US is government-centred and workers symbolise a governance apparatus utilized to curb financial fraud and waste/destruction of public resources.

      Furthermore, financial reward for US whistleblowers provides a good measure of motivation. In line with McGregor’s Theory Y, workers deserve adequate rewards for their mental and physical inputs towards the attainment of organisational goals. The academician therefore asserted that threats of punishment, coercion or other external threats do not influence hard work, commitment or loyalty from employees. In order words, individuals are born with innate determination to succeed but their level of commitment to set goals is dependent on the value of expected outcomes (rewards).

     Arguably, financial motivation is a major success factor in the US whistleblower legislations. With protective laws, employees in the US can easily adapt in their various workplaces and take responsibility for making disclosures not only accept moral defeat. Since COVID-19, the US model of financial motivation has increased the number of corporate whistleblower complaints and prosecutions, including the amount of public funds recovered from fraudsters. Additionally, the legislations have also restored transparency in both public and private sector to a great extent when compared to UK’s PIDA.

2.1.1. Criticism of the legislations

             The definition of Sarbanes-Oxley Act (SOX) contain provision that protect whistleblower from retaliation, however, the effectiveness of the provision is questionable. It is argued, the provision was merely an illusion without the necessary tools to dispel the law. The inability of whistleblower to demonstrate the link between retaliatory acts and a whistleblowing results in fewer positive judicial outcome.

             In accordance with Section 301 of the Sarbanes-Oxley Act, every publicly traded company is required to provide an anonymous channel for employees to provide questionable accounting or auditing matters to the company’s audit committee. However, the regulation failed by the definition, to address the confidentiality for whistleblowers in reporting information. Generally, individually, are more comfortable in voicing dissented views if their anonymity is assured. 

             Sarbanes-Oxley Act definition of protection is limited to fraud (18 U.S.C.s 1514A). Therefore, employee failure to report under a particular statute of the misconduct, notwithstanding the nature of the illegality, will not be afforded protection for whistleblowing.  So, in order to bring a claim of retaliation for wrongful dismissal for blowing the whistle, the employee must report the correct misconduct 

           Finally, the Sarbanes-Oxley Act is impeded with the statute of limitation constraint which weaken its effectiveness.  Section 806 limits total of ninety days’ post retaliatory action occurrences. As a result, most potential claimants are unable to recover their punitive and emotional injury damages. Because they are unaware of their right and the steps to take in pursing them within a time frame. Also, employees are not spur by the statute to whistle blow nor the employees compensated for taken risk in reporting a misconduct.

[1] Kenny K. ‘Whistleblowing. Toward a new theory’ (Cambridge MA: Harvard University Press 2019) 296

[2] Scheetz, A.M. and Wall, J. ‘Making Crime Pay: Timing of External Whistleblowing’ (Emerald Publishing Limited; Bingley 2019) 22; 1-30


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