Learn which employees are protected by the Sarbanes-Oxley (SOX) Act’s whistleblower provisions when reporting fraud allegations. Prepare for the SHRM-SCP certification exam.
Table of Contents
Question
Which employee would be covered under the whistleblower protections in the Sarbanes-Oxley (SOX) Act?
Answer
Employee who raises allegations of fraud to the Securities and Exchange Commission. SOX protects employees from retaliation when they raise allegations of fraud to either a federal agency or a member of the organization who has the authority to “investigate, discover, or terminate misconduct.” Raising the allegations to the Securities and Exchange Commission would qualify employees for protection under the act.
Explanation
The Sarbanes-Oxley Act (SOX) provides whistleblower protections for employees who report suspected fraudulent activities through specific channels. Under SOX, employees are shielded from retaliation when they raise allegations of fraud to either:
- A federal agency, such as the Securities and Exchange Commission (SEC), or
- A member of the organization who has the authority to “investigate, discover, or terminate misconduct.”
In this scenario, the employee who reports the alleged fraud to the SEC would be covered by the whistleblower protections outlined in SOX. Raising the allegations to the SEC, a federal agency with jurisdiction over securities fraud, qualifies the employee for protection from retaliation under the act.
It’s important to note that to be protected, the employee must have a reasonable belief that a violation has occurred and must report it through the proper channels specified in SOX. Reporting suspected fraud through other means or to individuals not authorized to address the misconduct may not provide the same level of protection.
SHRM Senior Certified Professional (SHRM-SCP) certification exam practice question and answer (Q&A) dump with detail explanation and reference available free, helpful to pass the SHRM-SCP exam and earn SHRM-SCP certification.