Monday, January 4, 2010

Sarbox Loophole?

"Congress wants to close a legislative loophole that has led to the dismissal of many corporate whistleblower complaints, undermining the government's goal of protecting employees who report fraud at publicly traded companies. Democratic lawmakers are seeking to amend the Sarbanes-Oxley Act's whistleblower-protection provision. Under the law, employees who claim to have been dismissed for reporting wrongdoing can file an adminstrative complaint with the US Department of Labor. ... In articles last year, the [WSJ] reported that the Labor Department has dismissed many whistleblower complaints on a technicality, saying the law, as written, doesn't apply to corporate subsidiaries. ... Under the Bush administration, Labor Department lawyers issued a directive saying there is 'no legal basis for the argument that subsidiaries of covered corporations are automatically covered,' because the language of the law does't 'expressly' mention subsidiaries. Sen Patrick Leahy, a Vermont Democrat and one of the main authors of the whistleblower provision, says Congress never meant to exclude subsidiaries", Jennfier Levitz at the WSJ, 1 December 2009, link:

The Bush adminstration's interpretation of this law was indefensible. See my 16 September 2008 post:
http://skepticaltexascpa.blogspot.com/2008/09/sarbox-scam-2.html. Apparently I understand legal interpretation better than the DOL's lawyers. Big deal.

2 comments:

OldSouth said...

Happy New Year, IA. And thanks for your insights. I learn something every day when I visit.

Re this post: The Bushies seemed to have a way of grinding down any and all who dared to disagree. As did the Clintons, and the Obamas, and let's not forget Nixon! Let us hope there will be some change in the atmosphere in 2010, where little bits of truth can leak out.

I still think we have another Madoff or three due to be exposed, just a hunch, no information to prove it. Maybe this change in the law will help.

Anonymous said...

It seems as though corporations had way too much preference in the Bush administration...

The idea that corporations are given all the advantages and protections of people and then free to shield some activities by making these activities "remote" through legal structuring flies against logic... and evidently against a primary lawmaker... so now the legislature goes back to redo the law...

Thanks for pointing this out IA... another example of big government shielding big business... hopefully that trend will reverse...