Whistle-Blower Leads Increase Sharply During 2004

A sharp increase in whistle-blower complaints is on the rise according to the SEC, forensic accountants and corporate lawyers, USA Today reported.

"There is increased whistle-blowing activity," said Harvey Kelly, a forensic accountant who heads fraud investigation at law firm Alix Partners. "There's an increased awareness on the part of people that Sarbanes-Oxley gives protection to individual whistle-blowers."

According to USA Today, warnings about accounting wrongdoing and problems are flowing into boardrooms at a high rate, mostly due to the federal protection section of the Sarbanes-Oxley Act of 2002.

"In this environment, every eruption has to be seriously considered," said Young. "What if somebody writes on the back of a candy wrapper that your bad debt is underfunded? Do you take it seriously? Do you have to launch an investigation?"

It was also reported that the Securities and Exchange Commission (SEC) has received close to 250,000 complaints this year alone, up from 180,000 during 2003.

"It's a tremendous source of leads," John Stark of the SEC’s enforcements division said.

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