Administration’s Narrow SOX Interpretation Kills Many Whistleblower Suits

In 2002, Congress passed a sweeping corporate reform bill known as the Sarbanes-Oxley Act (SOX). This legislation was a direct result of the crimes committed by publicly traded companies such as Enron and Worldcom. In drafting the bill, lawmakers wisely recognized that SOX would be meaningless without the "teeth" of a strong whistleblower protection provision. And when President Bush signed the bill, it was hailed as a great day for corporate reform, and for corporate whistleblowers. 


Unfortunately (yet predictably), since 2002, the Administration has refused to protect corporate whistleblowers in a manner consistent with SOX. Law professor Richard Moberly’s disheartening research indicates that only 3.6% of  SOX whistleblowers have been able to obtain relief through the administrative (Department of Labor) process. The problem lies, partly, in the Administration’s attempts to thwart whistleblowers by creating a loophole in the law.

A recent Wall Street Journal article  details how the Department of Labor has adopted an overly narrow interpretation of the SOX. The DOL has taken the absurd position that if you are employed by a subsidiary of publicly traded company, then you are not protected by the whistleblower provisions of SOX. I believe that this is an untenable position, and so do a couple of prominent members of the Senate Judiciary Committee. 

Senators Grassley and Leahy, who were principal sponsors of SOX and are longtime champions of whistleblowers, have begun to take action on this issue. They have sent a sternly worded letter to Secretary of Labor Elaine Chao demanding answers on the Administration’s position, which is highly inconsistent with the broad language found in the SOX legislation.

For further information on this issue, please view this letter, written to Senator Arlen Specter by Pittsburgh attorney Jason Archinaco. This letter details the problems with the DOL’s misguided policy, and includes attachments, such as the above referenced letter authored by Senators Grassley and Leahy.

Mr. Archinaco is a member of our Attorney Referral Service who represented UBS whistleblower Timothy Flynn.

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