SOX Gains Favor Among Whistleblowers

June 9, 2004 ( - Sarbanes-Oxley has been a success if Congress' intent was quantity of whistleblower suits, however the quality of those claims can be considered questionable.

Sarbanes-Oxley is the ” first or second” most popular among federal whistleblower statutes, said John Vittone, chief administrative law judge at the U.S. Department of Labor (DoL), according to a report by Corporate Counsel.   Vittone bases this claim on statistics compiled by the Occupational Safety and Health Administration (OSHA) that show as of mid-April, 228 claims have been filed under the Act.

Employees though have not realized much in the way of remuneration for their allegations.   Under Sarbanes-Oxley’s administrative procedures, complaints are first processed by an OSHA investigator, who issues a finding based on an initial examination. So far, investigators have dismissed more than 80% of the 156 claims examined. Parties can appeal an investigator’s finding to the Office of Administrative Law Judges (OALJ), headed by Vittone. Employers are faring well at this stage too. Of the 43 cases resolved on appeal to date, plaintiffs have prevailed only twice.

However, employers should not be so quick to dismiss the Sarbanes-Oxley suits that have emerged as either frivolous or without merit.   Reviewing the Sarbanes-Oxley complaints, the majority have been tossed out on legal, not factual, grounds.   Examples of the grounds for dismissal include potential plaintiffs attempting to apply the statute retroactively and timing glitches for plaintiffs who missed the 90-day deadline from the moment the alleged retaliation happens. Of the cases that have been heard on the merit so far, employees have prevailed in half.