Saturday, August 16, 2008
The SARBOX Scam
"A fired bank executive who became the first person to win protection under a federal law that shields whistle-blowers, only to see his victory overturned, suffered another setback in a federal appeals court Tuesday. A three-judge panel of the 4th U.S. Circuit Court of Appeals, did not reinstate David Welch to his job, ruling that he failed to explain how his employer's shoddy accounting practices could be considered a violation of federal law. ... Since Sarbanes-Oxley was signed into law, more that 1,000 self-professed whistle-blowers have come forward, and most have seen their cases rejected. Welch was the first to win his case before an administrative law judge, but that decision was reversed in June 2007 by the Department of Labor's [DOL] Administrative Review Board", my emphasis, Houston Chronicle, 6 August 2008.
What's the DOL doing? Is the DOL the Bush administration's (BA) version of the NAF, hearing arbitrations, see my 17 and 27 April and 26 June 2008 posts? Welch was the first winner in over 1,000 cases. Wow! Did they all lack merit? Or is the DOL's job to protect corporate miscreants? I always viewed SARBOX as bad law with one good provision: the whistle-blower provision; which the BA gutted. The Fourth Circut creates new law here. It ruled "shoddy accounting practices [cannot] be considered a violation of federal law". Amazing. Did these guys ever hear of 18 USC 1341 and 1343, the mail and wire fraud statutes; or 15 USC 78, which contains securities fraud; or 18 USC 1005, false entries? Imagine the Fourth Circuit just ruled these laws do not apply. In effect it gave a "stay out of jail free card" to all banks in its area. Expect the incidence of bad bank accounting to soar.