Scope of Sarbanes-Oxley Protected Whistleblowing
An article in Tax Notes entitled Viacom Sued for Wrongful Dismissal Over Transfer Pricing Arrangement quotes whistleblower lawyer Jason Zuckerman about the standard for proving protected whistleblowing under the whistleblower provisions of the Sarbanes-Oxley Act.
The article reports that Nataki Williams, a former vice president of Viacom Inc., alleges in her SOX complaint that Viacom terminated her employment for opposing Viacon’s planned transfer of rights to Teenage Mutant Ninja Turtles to a Dutch affiliate to illegally avoid U.S. taxes. Zuckerman is quoted about whether Ms. Williams’ disclosures concerning a potentially fraudulent tax avoidance scheme are protected under Section 806 of SOX:
Jason Zuckerman, a Washington-based attorney specializing in whistleblower law, said the absence of tax evasion probably would not weaken Williams’s claim.‘‘Williams’s disclosure is likely protected under SOX because this alleged tax avoidance could have caused Viacom to misstate its earnings,’’ Zuckerman said. ‘‘And her disclosures could implicate the adequacy of Viacom’s internal controls over financial reporting, which would also be a protected disclosure under SOX.’’
Zuckerman said that to be eligible for protection under Sarbanes-Oxley, a whistleblower must satisfy both the subjective and objective belief criteria of the law. Subjective belief means that the employee actually believed that the conduct at issue constituted a violation of pertinent law while the objective component requires that a reasonable person would have believed that the reported conduct violated the relevant statute, he said.
‘‘A conclusory and wholly unsubstantiated allegation of tax fraud probably will not amount to protected conduct,’’ Zuckerman said. ‘‘But if the employee can show that she investigated the matter and that an employee with similar knowledge and experience would reasonably conclude that there was tax fraud, she is likely to meet the reasonable belief standard.’’ . . . Zuckerman said Williams’s complaint is not the first instance in which a former employee alleged wrongful termination under SOX because of internal complaints about a company’s tax practices. In Vannoy v. Celanese Corp., ALJ Case No. 2008-SOX-00064, ARB Case No. 09-118 (ALJ July 24, 2013), an administrative law judge ruled in favor of a whistleblower who was fired after turning over confidential company data to the IRS.
For more information about the scope of protected whistleblowing under the Sarbanes-Oxley Act, see our FAQ titled “What whistleblowing disclosures are protected under the Sarbanes-Oxley Act?”
Experienced Sarbanes-Oxley Whistleblower Protection Lawyers
The whistleblower lawyers at Zuckerman Law have substantial experience litigating Sarbanes Oxley whistleblower retaliation claims. To learn more about corporate whistleblower protections, download our free guide to the SOX whistleblower protection law: “Sarbanes-Oxley Whistleblower Protection: Robust Protection for Corporate Whistleblowers.” The guide summarizes SOX whistleblower protections and offers concrete tips for corporate whistleblowers based on lessons learned during years of litigating SOX whistleblower cases.
The goal of the guide is to arm corporate whistleblowers with the knowledge to effectively combat whistleblower retaliation, avoid the pitfalls that can weaken a SOX whistleblower case, and formulate an effective strategy to obtain the maximum recovery.
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- See our column in Forbes: One Billion Reasons Why The SEC Whistleblower-Reward Program Is Effective.
- See our column in Going Concern: Sarbanes-Oxley 15 Years Later: Accountants Need to Speak Up Now More Than Ever.
- See our post in Accounting Today: Whistleblower Protections and Incentives for Auditors and Accountants.
- See our article providing Tips for SEC Whistleblowers
- See our post in The Compliance and Ethics Blog: Shkreli Trial Reveals the Challenges Faced by Compliance Whistleblowers.
Sarbanes-Oxley Whistleblower Retaliation Law