Sarbox is limited help for whistleblowers

By Jeremy Grant in Washington

Updated: 7:12 a.m. ET Sept. 7, 2007

Only a tiny fraction of whistleblowers bringing claims against companies have been successful since the passage of the Sarbanes-Oxley law five years ago, raising questions about the ability of employees to raise the alarm about corporate malfeasance, a study claims.

Sarbanes-Oxley contained new pro-whistleblower provisions when it was passed in 2002 in the wake of the Enron and WorldCom scandals.

Touted by some as a "revolution in corporate freedom of speech", it was intended to strengthen the protections available to employees who bring to light cases of fraud by including strong "anti-retaliation" provisions.

Yet a study by the University of Nebraska College of Law of 700 cases that were brought in the three years after Sarbox confirmed 3.6 per cent of cases were found in favour of employees. Only 6.5 per cent of employee cases were successful on appeal.

Richard Moberly, author of the study, told the FT: "It's an incredibly low win-rate that ought to be cause for concern."

Employees rarely won claims. Government agencies such as the Department of Labor that adjudicate such cases had interpreted the whistleblowing provisions in the law as narrowly as possible. Most cases did not qualify to be heard, he said.

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