whistleblowers

Cynthia Cooper, still an inspiration

Jim Kim — Fri, 11 Jul 2008 08:18:29 -0400

Cynthia Cooper, still an inspiration. Remember Cynthia Cooper? The soft-spoken former chief audit executive at WorldCom was the one who blew her whistle after uncovering a lot of bad practices at her own firm. Since those days, which made her a minor celebrity, she seems to have done well as a speaker. She even has a book out. Judging from a recent event in San Francisco, covered by the San Francisco Chronicle, she's still something of a hero to internal auditors everywhere. It took courage to go over the head of her CFO boss--who later pleaded guilty to fraud--and present her findings directly to the audit committee. Sarbanes-Oxley represents, in some ways, a political solution to the problem of fraud, but Cooper and others like her make clear just how personal all this can get and how hard it is to do the right thing.

For more:
- here's the San Francisco Chronicle article

Related Article:
Sarbox-style whistleblowing not a lot of fun

Countrywide whistleblower files new case

Tue, 20 May 2008 06:59:59 -0400

Mark Zachary has the potential to be a real thorn in the side of Countrywide at a tough time. He has filed another suit against the company. This one invokes the whistle-blower provision of Sarbanes-Oxley. In this updated suit, Zachary repeats his claims that he was fired for raising concern about some dubious financial practices at the company. If you recall, the former regional vice president said he objected to using questionable appraisers known to inflate the value of homes. He also objected to practices that made it easier for applicants to get "stated income" loans. Countrywide has denied wrong-doing in the past. It's tough to get OSHA to agree that you are protected under Sarbox. Most whistleblowers that go this route are denied. We'll see what happens.

For more:
- here's a brief update from the Houston Chronicle

Investment giant Fidelity's Sarbox problem

Tue, 13 May 2008 06:59:59 -0400

Fidelity Investments, the mutual fund and brokerage behemoth, is privately held, so Sarbanes-Oxley does not apply. But two employees have invoked the law's whistleblower protection clauses as they lodged charges about the way the firm conducts business. Their cause has been taken up by some consumer activists, notably the Consumer Federation of America, notes the Boston Globe. They have asked the SEC to apply Sarbanes-Oxley's whistle-blower protection rules to fund firms. Activists note that whistleblowers have brought previous scandals to light. A good example is Peter Scannell, who brought improper trading at Putnam Investments to light. The reality is that Sarbox whistleblower protection, as we know, hasn't helped many whistleblowers.

For more:
- here's the Boston Globe article

Were you meant to be a whistleblower?

Tue, 29 Apr 2008 06:59:59 -0400

For a while, people assumed that the Sarbanes-Oxley whistleblower provision would encourage employees to come forward. It hasn't really worked out that way. We've noted that very few whistleblowers have found Sarbox to be much of a benefit. So if you are considering becoming a whistleblower, you have to understand that few people have won the Sarbox whistleblower protection. The law is directly related to financial crimes. Obviously, some have tried to find loopholes in that logic. OSHA almost always finds in favor of the employer in cases where retaliation is alleged. Despite 50-plus federal whistleblower and anti-retaliation laws, your choice will require a lot of personal courage. It helps to be right, and I do not mean that in a flip way. You're risking everything. Make sure it is worth it.

For more:
- here's some advice from the Minneapolis Star-Tribune

ALSO NOTED: CEO succession planning a good idea from Sarbox perspective;

Tue, 01 Apr 2008 07:59:58 -0400

> At Fidelity, a whistleblower emerges. Article
> CEO succession planning a good idea from Sarbox perspective. Article
> Sarbox leads to more in-house lawyers being charged. Article
> Enron still in the news. Article
> What kind of execs fail to thrive in Sarbox era? Article
> Got a grip on your telecom expenses? Article

And finally ... 10 all-time worst computer viruses. Article

Ignore whistleblowers at your peril

Tue, 11 Mar 2008 07:59:59 -0400

Recall that Section 302 of Sarbanes-Oxley requires companies to set up a venue where whistleblowers can report misdoings. That caused a lot of companies to scramble. But what is done with those reports really is critical. You need a vetting and escalation process. This is a pain, but the recent case of Dyadic, which wasn't subject to Sarbox until it went public in 2004, points out how a formal process really can help. With Dyadic, it seems that early reports of fraud were not well handled, according to cfo.com. In fact, they remained dormant for years. For whatever reason, the CEO seems to have kept the initial whistle blows to himself. The whistleblower clause of Sarbox, in general, has not led to a lot of uncovered crime. But a process is required.

For more on Dyadic:
- here's the article from cfo.com

Related Articles:
What to do about whistleblower protection? Article
Has Sarbox really changed attitudes? Article
Enron 'whistleblower' a fraud? Article
Will this Sarbox whistleblower fare any better? Article
Sarbox-style whistleblowing not a lot of fun. Article

Has Sarbox really changed attitudes?

Tue, 04 Dec 2007 06:59:59 -0500

So how to evaluate the effect of Sarbanes Oxley? We all know that big-company restatements have declined. We know that more companies, in year three, are getting more comfortable with the processes. We know that audit committees are working harder. But has it changed any attitudes? According to a recent Ethics Resource Center's 2007 survey, 56 percent of employees surveyed had observed violations of ethics standards, policies or the law; 42 percent of those who witness misconduct did not report it. Is this a reflection of the whistleblower problems of Sarbox? Maybe. A lot of people just do not want the hassle that comes with fingering a colleague. Maybe it's time to acknowledge that even with reticent witnesses, the law still makes it easier for serious wrong-doing to be discovered. That's a victory of sorts.

For more:
- here's the survey results

Wal-Mart whistleblower drama still alive

Tue, 13 Nov 2007 06:59:59 -0500

The saga of Wal-Mart employee Chalace Epley Lowry continues. The latest news is that OSHA has opened a whistleblower investigation based on her complaints. Recall that she fingered an executive for what she erroneously thought was insider trading. Her name was somehow revealed to the executive in question, and she was forced to seek employment elsewhere in the vast company. But she can claim a litany of woes listed by Business Week Online. Three months of "extreme stress" as she looked for a new job, stress-induced angina, marital issues and a home foreclosure. It's doubtful she'll get far with the Sarbox whistleblower route.

For more:
- here's the Business Week Online article

Related articles:
- What to do about whistle blower protection?
- Enron "whistleblower" a fraud?
- Will this Sarbox whistleblower fare any better?

What to do about whistle blower protection?

Tue, 23 Oct 2007 06:59:59 -0400

It's no secret that whistle blowers have not fared well under Sarbanes Oxley. Very few of the 491 whistleblower complaints of retaliation filed with OSHA have led to rulings for the employee, according to recent study. This is not new. But rarely have we heard talk of solutions. The intent of the law was to provide some protection to those willing to stand up for they think is right. According to Web CPA, some think there is a chilling effect brewing, which will result in fewer accountants and others willing to come forward with evidence of wrong-doing. A few tweaks to the law have been discussed, such as shifting responsibility for hearing these claims from OSHA to the SEC.

For more:
- here's a Web CPA article

Related articles:
- Enron 'whistleblower' a fraud?
- Will this Sarbox whistleblower fare any better?
- Sarbox-style whistleblowing not a lot of fun
- Morgan Stanley whistleblower complaint struck down

Read more on: Whistleblowers

Enron "whistleblower" a fraud?

Tue, 16 Oct 2007 06:59:59 -0400

Lynn Brewer has achieved fame with her new book Confessions of an Enron Executive: A Whistleblower's Story. She has given up to 200 speeches including the keynote address at a Sarbanes-Oxley conference hosted by the New York Stock Exchange. But now a USA Today investigation has raised claims about whether she has exaggerated her status as an Enron "executive" and as a "whistleblower." The paper calls her "an astute self-promoter who parlayed an undistinguished 32-month stint as an Enron employee into a lucrative career in the corporate ethics industry." Another zinger: "Her transformation from back-office researcher to international corporate governance heroine is astonishing." This is quite a story.

For more:
- here's the article