Whistle-blowers donning SOX-like sheep’s clothing


Whistle blowers who file retaliation claims under a provision of the Sarbanes-Oxley Act hardly ever win, and the reason appears to be the motives behind the filings.
So says the University of Nebraska-Lincoln College of Law, which plans to release study results next month of more than 700 Occupational Safety and Health Administration filings made between August 2002 and July 2005.
Sarbanes-Oxley, the corporate accounting law enacted in 2002, affords protections to employees of public companies who attempt to expose accounting fraud. If employers retaliate against the whistle blowers, employees can complain to OSHA, which can order reinstatement, back pay and reimbursement for litigation costs.
But, during the act’s first three years, OSHA sided with would-be whistle blowers only 3.6 percent of the time, and Department of Labor judges who hear appeals to OSHA decisions found in favor of just six of the 93 employees for a win-rate of 6.5 percent — lower than most other types of employee claims, the Lincoln study finds.
That might appear disturbing on the surface, but a deeper look into the matter shows that many of those who cry foul in the name of SOX might be doing so as an attempt to strike at employers for reasons unrelated to accounting.
Many of the OSHA claims come from employees who feel they were unfairly fired and have tried to manufacture SOX claims. OSHA administrators rejected two-thirds of claims for those reasons, and law judges threw out 95 percent.
SOX advocates say the findings are not surprising and that they expected a wave of such claims as an attempt to test the boundaries of the legislation.

IRS expedites EIN process

Business owners can receive an Employer Identification Number through a Web-based system that instantly processes requests and generates identification numbers in real time.
“Essentially they can get one while they wait — within minutes,” said Richard Morgante, IRS Commissioner of Wage and Investment.
The application can be accessed through IRS.gov. If the information passes the automatic validity checks, the IRS issues a permanent EIN to the taxpayer. If the application is rejected, there’s an opportunity to correct and resubmit.
The Internet EIN application is interactive and asks questions tailored to the type of entity the taxpayer is establishing. This is similar to tax processing software packages on the retail market.
The system provides “help” screens throughout the process. This means taxpayers will no longer have to print the EIN instructions and separately search for answers while requesting an EIN.
When the EIN application process is complete, a taxpayer has the option to view, print and save his or her confirmation notice, as opposed to waiting for the IRS to mail it.
Third parties authorized by the taxpayer also can be provided with the EIN, but the third party cannot view, print or save the confirmation notice. Instead, the confirmation notice is mailed to the taxpayer.

Wells Fargo contributions

Fifteen Colorado Springs nonprofit organizations have been awarded Wells Fargo grants totaling $21,000 as part of the 14th annual Wells Fargo Community Assistance Fund.
The organizations are:

  • Assistance League of Colorado Springs
  • Cerebral Palsy Association of Colorado Springs
  • Children’s Literacy Center
  • Colorado Springs Teen Court
  • Dreampower Animal Rescue
  • Faith Partners
  • In the Lord’s Service
  • Kennedy Center’s Imagination Celebration
  • KIDPOWER of Colorado Springs
  • Koinonia House of Colorado Springs
  • Pikes Peak Area Crime Stoppers
  • Pikes Peak Therapeutic Riding Center
  • Rocky Mountain Field Institute
  • Western Museum of Mining & Industry
  • Women’s Resource Agency

The Community Assistance Fund committed $260,000 this year in Colorado to certified 501(c)(3) organizations with annual budgets of $350,000 or less.

Fee-based account changes

The Securities and Exchange Commission has decided to provide some non-discretionary advisory accounts with limited relief from new principal trading restrictions.
Fee-based brokerage accounts are on their way out because of the overturned exemption rule, but some of their characteristics will remain in fee-based advisory accounts.
Firms now must provide written notice of consent from clients before relying on the rule. They also must notify investors in writing that the firm might engage in principal trading and describe possible conflicts of interest, as well as the way it will address those problems.
Principal trades that do not involve a security that is issued by the dually registered firm or a transaction in which that firm is an underwriter — aside from offerings involving investment-grade debt securities — are eligible for relief.
The rule will have a 24-month sunset provision.