Sarbanes-Oxley Act Lawyers in Los Angeles
Award-Winning Employment Law Attorneys on Your Side
In response to the financial scandals involving Enron and Arthur Andersen, the U.S. Congress passed the Sarbanes-Oxley Act in 2002. This sweeping legislation was designed to prevent the recurrence of widespread financial reporting fraud that distorts information investors rely upon. “SOX,” as it is popularly known, requires publicly traded companies to make certifications about their financial conditions and imposes stiff penalties on companies and their officers for misrepresenting their finances to shareholders and would-be investors. If you believe your employer may be misleading investors, contact the employment law attorneys at Feldman Browne, APC for a free consultation.
Why Companies Commit Fraud
Increasing shareholder value is the goal of most businesses. By bringing in new sources of capital, they can grow by exploring new opportunities. However, some businesses obtain financing by misrepresenting their earnings or operational costs, often resulting in disastrous consequences for investors.
The stated purpose of SOX is, “to protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws.” SOX mandates corporate responsibility, public disclosure, and improved methods of auditing and financial reporting to effectuate this goal.
Protecting Those Who Report Fraud
Misrepresenting a company’s finances is almost always an intentional and misleading tactic meant to secure more funding without fostering the genuine growth that naturally results in more investment. SOX “prohibits discriminating against an employee for “provid[ing] information … regarding any conduct which the employee reasonably believes constitutes a violation of a listed law.”
Section 806 of SOX prohibits covered employers from dismissing or discriminating against an employee who files, causes to be filed, testifies, participates in, provides information, or assists in an investigation regarding employer conduct that the employee reasonably believes constitutes a violation of the law.
This could include:
- Mail, bank, wire, or securities law
- Any rule or regulation of the Securities and Exchange Commission (SEC)
- Any provision of Federal law relating to fraud against shareholders
To qualify as an employer, the company must be publicly traded. That is, the prohibition of section 806 only applies to companies that either hold a class of securities registered under section 12 or are required to file reports under section 15(d) of the Securities Exchange Act of 1934, as well as “any officer, employee, contractor, subcontractor, or agent of such company.” If a plaintiff can successfully mount a whistleblower claim, both civil and criminal penalties may be sought.
Contact a Sarbanes Oxley Attorney now. Call (310) 984-1415.