Sarbanes-Oxley Act of 2002 Whistleblower Attorney

Following a number of accounting scandals at major U.S. corporations, Congress enacted the Sarbanes-Oxley Act of 2002. The goal of this landmark legislation was to protect investors from securities fraud, update corporate accounting and governance standards, and improve public trust in the economy. This extends to the securities and financial sectors, which is why the Securities and Exchange Commission (SEC) is primarily responsible for enforcing Sarbanes-Oxley.

The SEC investigates alleged violations of the federal securities laws and brings to justice those who cheat and mislead investors with dishonest corporate accounting practices. To help carry out this important mission, the SEC often relies upon private citizens to report information they uncover through their employment and other relationships with financial, accounting, and auditing firms. These corporate whistleblowers not only help shore up confidence in the nation’s financial markets, they can also claim a potentially substantial reward for tipping off federal officials.

If you have information about a corporation or firm that is violating Sarbanes-Oxley, the skilled whistleblower attorneys of Oberheiden P.C. can help you submit a complaint and negotiate for the maximum reward amount that is available. Find out how we represent whistleblowers and help them assert their rights.

Understanding Sarbanes-Oxley

Financial scandals at Enron, Tyco International, and WorldCom unnerved investors and undermined confidence in some of the largest publicly traded companies in the country. It became clear that the financial statements made by these and other companies were fraudulent, misleading, unreliable, and lacking in the independence necessary to provide a clear picture of the companies’ financial health. The Sarbanes-Oxley Act of 2002 was passed to change this by updating financial regulations for accountants, auditors, and corporate officers.

These are a few of the most notable requirements that became law with passage of Sarbanes-Oxley:

• Corporate CEOs and CFOs (chief financial officers) must personally certify in writing the accuracy of the company’s financial statements in accordance with SEC disclosure rules
• Financial statements must fairly and accurately depict the financial conditions of the companies that issue them
• Publicly traded companies must adopt, maintain, and enforce internal controls that ensure the accuracy of information that is reported to investors
• The internal controls must include reporting methods to make sure that they meet the requisite legal standards
• A corporation’s board of directors must establish an audit committee, the members of which are independent of the company’s management
• New record-keeping requirements and rules concerning the falsification and destruction of important corporate documents and which records must be kept (and for how long)

The law also mandates a number of penalties for those who violate its provisions. For instance, CEOs and CFOs who knowingly sign off on inaccurate financial statements can face prison time. There are also criminal penalties for altering or destroying corporate documents, retaliating against whistleblowers, and violations of federal law relating to shareholder fraud.

How Do Corporations, Accountants, and Others Violate Sarbanes-Oxley?

As with any other law regulating financial and securities markets, corporations have often fallen short of the strict requirements imposed by Sarbanes-Oxley. These are some of the ways that regulated companies and others have broken the law:

• Problems with financial statements: Filing inaccurate and misleading statements is still relatively common, despite the clear rules created by Sarbanes-Oxley. These statements give investors a false impression about a company’s financial health and can therefore induce them to make unwise investment decisions.
• Problems with record-keeping: Sarbanes-Oxley mandates record-keeping requirements that forbid the alteration or destruction of certain corporate documents. Destroying or altering these records is a strong indication that a company is attempting to mislead the investing public.
• Insufficient financial controls: A corporation’s internal accounting and reporting controls cannot be mere window dressing intended to give the appearance of compliance. The controls must be sufficient considering the nature and actual operation of the business in question.
• Accounting irregularities: Various standards govern the activities of accounting firms, and accountants must be mindful to apply the correct ones. When incorrect standards are used, the financial statements that reflect them can present an incorrect picture of a company’s finances and thereby mislead investors.
• Auditing irregularities: Sarbanes-Oxley requires independent audits, a major step forward from the previously permitted audits that were often riddled with conflicts of interest. Without reliable audits, an investor cannot depend upon a company’s financial statements or trust that their investment products are sound.
• Inappropriate corporate relationships: A major flaw in the previous regulatory regime was that auditors were inappropriately close with corporate boards of directors and executive staff. Sarbanes-Oxley intended to change that by imposing rules that require auditors to make independent and objective assessments of a company’s finances.

Put our highly experienced team on your side

Dr. Nick Oberheiden

Founder

Attorney-at-Law

Lynette S. Byrd

Former DOJ Trial Attorney

Partner

Brian J. Kuester

Former U.S. Attorney

Hon. Kevin McCarthy

55th Speaker, U.S. House of Representatives (ret.)

Government Consultant

Mike Pompeo

Of Counsel

Former U.S. Secretary of State

John W. Sellers

Former Senior DOJ Trial Attorney

Linda Julin McNamara

Federal Appeals Attorney

Nicholas B. Johnson

Former Prosecutor

Roger Bach

Former Special Agent (DOJ)

Chris J. Quick

Former Special Agent (FBI & IRS-CI)

Michael S. Koslow

Former Supervisory Special Agent (DOD-OIG)

Ray Yuen

Former Supervisory Special Agent (FBI)

Your Role as a Sarbanes-Oxley Whistleblower

Whistleblowers can help the SEC identify and prosecute financial, accounting, and auditing practices that break the law, defraud and mislead investors, and jeopardize the U.S. financial and securities markets. With Oberheiden P.C. by your side, you can have confidence that your whistleblower complaint meets these and other SEC criteria:

• You have original information about illegal activity: The evidence that you have about violations of Sarbanes-Oxley must be original, which means that neither the SEC nor the media and general public already know about it.
• You must produce the information voluntarily: If the SEC learns what you know because of a subpoena, then your information most likely won’t meet this requirement. As a general rule, this means that the whistleblower initiates contact with the government.
• The information must support the SEC’s enforcement actions: The SEC values detailed evidence that assists the agency in carrying out its enforcement efforts. Hearsay, speculation, and guesses are not enough to prove that the employer violated securities laws.
• The SEC must recover over $1 million in sanctions: Using the evidence you provide, the SEC must be able to recover in excess of $1 million in monetary sanctions from the parties who break the law. The whistleblower may be able to claim a portion of this as a reward.

When it comes to meeting these and other requirements, understanding the nation’s securities and financial disclosure laws – including Sarbanes-Oxley – is indispensable. Our experienced team is ready to work with you and help you file your whistleblower complaint. If you have original information that a financial, accounting, or auditing firm is not complying with their duties under the law, contact Oberheiden P.C. We can review the evidence you have and begin working on your case today.

FAQ: Filing a Sarbanes-Oxley Act of 2002 Whistleblower Complaint