What Are the Sarbanes-Oxley and Dodd-Frank Whistleblower Protection Programs?
| Read Time: 3 minutes | Whistleblower

The Dodd-Frank Act and the Sarbanes-Oxley Act (SOX) are two keystone financial regulation laws. Congress passed the two laws in the early 21st century to combat corporate fraud and improve transparency and accountability in the U.S. financial system. To help accomplish these goals, Congress included whistleblower protections in both laws. In this article, we will review how each law protects whistleblowers. We will also briefly discuss the basics of whistleblower protection.

If you think you might be a protected whistleblower under either the Dodd-Frank Act or SOX, then this article is only your starting point. To learn more, contact one of our dedicated Los Angeles whistleblower lawyers today. We offer free and confidential initial consultations.

What Is Whistleblower Protection?

A whistleblower is someone who reports wrongdoing. Whistleblower protection refers to any legal statute that protects a whistleblower from retaliation. Naturally, your next question is probably, “what is whistleblower retaliation?” 

According to the U.S. Department of Labor, retaliation occurs “when an employer. . . fires an employee or takes any other type of adverse action against an employee for engaging in protected activity.” An adverse action is anything “which would dissuade a reasonable employee from raising a concern about a possible violation or engaging in another related protected activity.” Retaliation comes in many different shapes and sizes. Just a few examples of retaliation include: 

  • Withholding promotions;
  • Threats of or actual physical violence;
  • Increased workload or removal from prestigious assignments;
  • Any kind of disciplinary action, including verbal counseling;
  • Loss of job-related perks;
  • Reassignment to a different position, even if the pay is the same;
  • Loss of salary;
  • Verbal harassment.
  • Denial of training or work-related credentials; and
  • Social isolation or exclusion from the workplace.

Oftentimes, whistleblower retaliation is cloaked in the form of apparently harmless or unrelated activities. For example, your boss might say they are reducing your workload because of organization-wide “realignments.” A qualified whistleblower attorney will be able to identify acts of retaliation. They will also be able to take necessary action to obtain compensation for your losses. 

What Is the Sarbanes-Oxley Act?

Congress enacted SOX in 2002 after the infamous Enron scandal. SOX requires companies to have internal procedures to verify the accuracy of financial statements. It also requires companies to hold their CEO and CFO accountable for the accuracy and reliability of financial reports. Additionally, SOX created the Public Company Accounting and Oversight Board (PCAOB). The PCAOB is responsible for regulating public audit corporations and developing high-quality auditing standards. 

Importantly, SOX prohibits retaliation against employees who provide information about activities that violate the act or any other rule or regulation by the Securities and Exchange Commission. SOX allows whistleblowers who have been retaliated against to file a complaint with the Department of Labor and also in a federal district court. If the whistleblower succeeds in a lawsuit against their employer, they may obtain compensatory damages for their losses, as well as special damages.  

What Is the Dodd-Frank Act?

Congress passed the Dodd-Frank Act in 2010 in reaction to the financial abuses that caused the Great Recession. Dodd-Frank created the Consumer Financial Protection Bureau to protect consumers from predatory financial practices and products. The Dodd-Frank Act also banned any retaliation by employers against whistleblowers. Specifically, the Dodd-Frank Act protects employees who provide information regarding:

  • Bank, wire, or securities fraud;
  • Fraud against shareholders; and
  • Violations of any Security and Exchanges Commission (SEC) rule or regulation. 

Violation of the prohibition against retaliation allows the whistleblower to sue their employer in court. Finally, the Dodd-Frank Act empowered the SEC to reward whistleblowers who provided the agency with information. The act allows whistleblowers to receive between 10% to 30% of any monetary sanctions imposed by the SEC on an employer. 

Looking to Learn More About Federal Whistleblower Protections? Our Attorneys Are Ready to Assist. 

Now you have an answer to your question, “What are the Sarbanes-Oxley and Dodd-Frank Whistleblower Protection Programs?” Without a doubt, whistleblowers play a valuable role in society by helping hold wrongdoers accountable. In working to make the world a fairer place, they sacrifice their careers, financial security, and personal well-being. Here at King & Siegel LLP, we honor the bravery of whistleblowers by fighting for them in the courtroom. When you attend a free initial consultation, we will review the facts of your case and help you understand your legal options. If filing a lawsuit is the best course of action, then we are ready to provide you with outstanding legal representation. There’s no reason to gamble with your future. Every one of the attorneys at our firm has a proven track record of success. Our attorneys are dedicated to helping people who have been wronged in the workplace get the justice they deserve. Let us help you protect your rights and hold your employer accountable. Contact us online or by phone to schedule your consultation.

Author Photo

Julian Burns King graduated with honors from Harvard Law School and founded King & Siegel in 2018. As head of the Firm’s discrimination and harassment practice areas, she champions the rights of working parents and victims of workplace discrimination and harassment. She has been recognized as a “Rising Star” by Super Lawyers annually since 2018 and has recovered tens of millions of dollars on behalf of her clients.

Read More Articles by Julian Burns King