Use this area to place useful resources and links. Here are some examples:
"Sarbanes-Oxley" and "public company" are so often spoken in the same breath that one can easily forget the implications of the statute for organizations that are not publicly held. Those implications may be profound, particular�ly in the realm of employment law. Sarbanes-Oxley expands dramatically the protections afforded to whistle-blowers who are employed by private companies and allege retaliatory discharge or reprisal in the terms of their employment.
How does the new Sarbanes-Oxley regime affect private companies? Private companies may be covered explicitly by state law. At least half the states in the nation have considered "mini-Sarbanes-Oxley" legislation, and two states have enacted laws expressly adapting Sarbanes-Oxley whistle-blower prohibitions and protections to private companies. In upcoming legislative sessions, more statehouses are likely to do so.
Then there are the current implications for companies that are not publicly owned but hope someday they will be. Those companies will surely feel pressure from their funding sources and potential acquirers to establish governance and compliance protocols that will pass muster if they, in fact, become public.
These implications may affect privately held companies even assuming Sarbanes-Oxley does not apply directly. But the statute does have direct application to private companies in the provisions protecting whistle-blowers from retaliation.
How does the new Sarbanes-Oxley regime affect private companies? Private companies may be covered explicitly by state law. At least half the states in the nation have considered "mini-Sarbanes-Oxley" legislation, and two states have enacted laws expressly adapting Sarbanes-Oxley whistle-blower prohibitions and protections to private companies. In upcoming legislative sessions, more statehouses are likely to do so.
Then there are the current implications for companies that are not publicly owned but hope someday they will be. Those companies will surely feel pressure from their funding sources and potential acquirers to establish governance and compliance protocols that will pass muster if they, in fact, become public.
These implications may affect privately held companies even assuming Sarbanes-Oxley does not apply directly. But the statute does have direct application to private companies in the provisions protecting whistle-blowers from retaliation.
The statute creates both civil and criminal liability for retaliation against whistleblowers. The civil provision has already produced a wave of litigation, with more than 300 charges filed since July 2002.
In some respects, it is narrowly tailored: It protects only people who were employed by or otherwise working for publicly traded companies. Significantly, an administrative law judge has ruled that the civil provision applies to employees of private companies that are subsidiaries of publicly held companies. And the civil remedy applies to "contractors and subcontractors" of publicly traded companies, regardless of whether the contractors and subcontractors are themselves publicly traded. (Alleged reprisal against employees of Arthur Andersen, a subcontractor to Enron, helped spur enactment of Sarbanes-Oxley.)
The parallel criminal provision sweeps far more broadly: "Whoever knowingly, with the intent to retaliate, takes any action harmful to any person, including interference with the lawful employment or livelihood of any person, for providing to a law enforcement officer any truthful information relating to the commission or possible commission of any federal offense, shall be fined under this title [$250,000] or imprisoned for not more than 10 years, or both."
Note that the provision may apply to any person in any sector of the economy, whether associated with a public company or a private one.
Corporate officials might, at first blush, conclude that this statute is unlikely to affect their personnel decisions because historically, criminal enforcement of such a provision is relatively uncommon. But the reach of the law is so broad and the opportunity for ambitious prosecutors to make a name for themselves so clear, that one dare not ignore the potential for criminal liability. And in some jurisdictions, private civil claims may be fashioned under the theory of "wrongful discharge" in violation of public policy.
The potential for mischief is great. An employee anticipating that he or she will suffer adverse action in his/her employment can effectively preempt the process by reporting some element of truthful information about any matter governed by federal law and then effectively be insulated because of the company's apprehension over the prospect of criminal sanctions or possibly wrongful discharge litigation.
What steps should a company take to minimize this risk? The same steps that public companies are taking -- promulgate ethics, conflict-of-interest and document-retention policies; establish effective complaint procedures; undertake serious training, especially for front-line supervisors and those in sensitive positions; and exercise great care in dealing with personnel decisions that create the opportunity for whistle-blower claims.
Washington Business Journal - by Paul Mickey
Resources & Links
What steps should a company take to minimize this risk?
Do you have more than 25 Employees? Then yes you should take steps. What are they?
The same steps that public companies are taking -- promulgate ethics, conflict-of-interest and document-retention policies; establish effective complaint procedures; undertake serious training, especially for front-line supervisors and those in sensitive positions; and exercise great care in dealing with personnel decisions that create the opportunity for whistle-blower claims.
Dont think that you are not above this, if you have any financial relations with a Public Company, this applies.
We can assist you in Corporate govenance, creating Employee manuals, Accounting internal controls, Document retention, and Effective Ethics and Conflict Training to address these conditions in small businesses and Non Public Companies.
If you haven't yet made your tax appointment with your accountant, please do so soon, slots are filling up very quickly. Make an appointment.
