Two senators are ratcheting up pressure on the Securities and Exchange Commission to enforce a tough whistle-blower law.
With a government finding that a publicly traded company retaliated against a whistle-blower, Iowa Republican Charles Grassley and Vermont Democrat Patrick Leahy asked for âaggressive enforcementâ in a letter last week to SEC Chairman William H. Donaldson, the Associated Press reported. Donaldson was also asked for details of the agency's enforcement plans. SEC spokesman Matthew Well declined to comment.
Leahy and Grassley authored the whistle-blower provisions of the Sarbanes-Oxley Act of 2002, the corporate reform legislation spawned by a series of massive scandals such as the one that brought down Enron. The whistle-blower section gives insiders who report misdeeds more protection than any other law. For example, the law requires corporate lawyers to report any misconduct they observe, and it includes criminal penalties of up to 20 years in prison and $5 million in fines for firing a whistle-blower.
Leahy said a recent ruling by the Labor Department gives the SEC ''clear opportunity to show and tell the public how it will be handling allegations that could form the basis for a criminal violation of the whistle-blower provisions" of the law. The Department of Labor has oversight over the whistle-blower protections.
The Department of Labor's Office of Occupational Safety and Health ruled on Oct. 7 that CheckFree Corp. of Norcross, Ga., fired its product-marketing director after he complained of bloated claims of the company's software capabilities and of inflated revenue statements. The company's software products allow banks and businesses to offer Internet bill-paying services to its customers.
Larry Hogan told superiors that he was concerned that deceptive marketing was used with Mellon Bank, Anthem Blue Cross/Blue Shield and National City Bank. The Labor Department ruled that CheckFree must pay Hogan back pay, interest, counseling fees and job search expenses of more than $103,000, and other compensation. Both sides appealed the preliminary order.
Stephen M. Kohn, a director of the National Whistleblower Center, who represents Hogan, said the Labor Department ''can only protect the private interest of the whistle-blower." But the SEC, he said, ''can use this law to protect the public interest of civilly and criminally investigating corporate wrongdoing."
He said Congress' plan to use company insiders as key players in reforming corporate culture can succeed ''only if the SEC does its job."