Whistle-blowers Never Win

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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.

WorldCom Whistle-blower Cynthia Cooper
What she was feeling and thinking as she took the steps that, as it turned out, would change Corporate America.
Whistle-blowers Never Win
Of nearly 1,000 employees who have claimed Sarbox whistle-blower protection, many have seen their cases dismissed, and some have settled. But not one has ultimately prosecuted their case successfully.

The Big Lie
In her gripping new book, former WorldCom internal auditor Cynthia Cooper tells how she blew away CFO Scott Sullivan's smokescreen.

Five Years Out of Work
Five years after being the first to file for whistle-blower protection under Sarbanes-Oxley, former CFO David Welch has lost the family farm and his savings, and still doesn't have a job.
Whistle-blowers Face High Burden of Proof
A CFO lost his case based on the question of "reasonable belief," a measurement that employee advocates say the whistle-blower appeals board treats too narrowly and inconsistently.
First Sarbox Whistle-blower Loses Case
A review board finds that the former CFO could not have "reasonably believed" that Cardinal Bancshares misled investors.
Whistle-Blower Woes
Many companies think the whistle-blower provisions of Sarbanes-Oxley will spark nuisance suits by disgruntled employees. The truth is far more complex.
Whistle-blower Shield Stops at Border
Court rules that some overseas workers are not protected by this provision of Sarbanes-Oxley.
Trials of a CFO Whistle-Blower
In many ways, Dave Welch is Exhibit A in the debate over how well the Sarbanes-Oxley Act of 2002 can defend conscience-stricken employees.
Judge Won't Enforce Whistle-blower Ruling
David Welch, the first Sarbanes-Oxley whistle-blower, remains in legal limbo on technicalities.
Feds Back Sarbox Whistle-blower
David Welch, former CFO turned Sarbox whistle-blower, now has the "flag and seal of the United States" on his side in his battle with Cardinal Bankshares, his attorney says.
CFO Whistle-Blower Is Vindicated
Court decision is said to be the first related to Sarbanes-Oxley whistle-blower protections.
CFO Whistle-blower Still in Limbo
Sarbanes-Oxley ''is certainly not working in terms of reinstatement,'' says the attorney for a onetime finance chief who refused to certify his company's financial statements.
Whistle-Blower Claims Mostly Dismissed
Eighty percent of the claims of employees seeking protection under the Sarbanes-Oxley Act have been tossed aside.
Phoning It In
In a recent study of nearly 200,000 whistle-blower reports of alleged infractions, almost two-thirds of the complaints were made via hotlines without first alerting anyone in management, and few prove to be false alarms.
Talk, or Walk?
Employees who try to bring to light unethical or illegal practices by their employers are often criticized, treated like outcasts, fired, or worse.
SEC To Pursue Non Whistle-Blowers
This is the first time the SEC has ever brought a civil injunction against an auditor who has violated Section 10A of the SEC Act of 1934.
Study: Sarbox Curbs Fraud Whistleblowing
Despite the 2002 law's whistleblower protection provision, employees have been less likely to come forward with fraud concerns.

Fix or Fraud?
The CFO says he was making a good-faith effort to straighten out a serious ERP problem. The SEC says he committed financial fraud. And right in the middle of the whole mess, Sarbanes-Oxley passed.
Whistle-blower Shouted Down
An independent investigation dismisses a fired controller's claims of an inventory gap at LDK Solar.
CFO Whistleblower Reinstated by Court
An administrative law judge rules that the finance chief should get his job back, plus back pay and damages.
Did Wal-Mart Fire a Whistleblower?
A former vice president at the retailing giant reportedly gave the company information that aided a probe leading to an ouster of the then-vice chairman.
Office Depot to Restate over Vendor Allowances
The office-supply retailer found a material weakness in its internal controls.
SEC Probes DaimlerChrysler Bribe Charge
A whistleblower in the audit department reportedly claimed that he was fired after telling senior officials about corruption at the company.
IRS Agent Reports Corrupt Tech-Company Audit
The whistleblower alerted the FBI and SEC about a tax case settled to keep a business and its top executives from paying $51 million in taxes.
Whistle-blower Lawsuit Gets DoJ Backing
Justice Department alleges that three companies ''systematically solicited and/or made payments of money and other things of value'' to secure government technology contracts.

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