After internal audit chief Cynthia Cooper blew the whistle on accounting fraud at WorldCom, the U.S. Senate responded by adding Section 404, on the assessment of internal controls, to the Sarbanes-Oxley Act in 2003. Though companies have struggled with 404 compliance ever since, what Cooper did could be considered a success story.
Other whistle-blowers, however, usually come to nothing but grief. While a key goal of Sarbox was to encourage whistle-blowers to come forward and report their companies' financial misdeeds, the reality is that a vast majority of whistle-blowers who have claimed protection under Sarbox have had no luck in the courts. In June 2007, the first whistle-blower to file such a claim lost his final appeal with the Department of Labor. The vast majority of cases never even get that far.
CFO.com explores how whistle-blower protections are supposed to work and why they often do not.