Sarbanes-Oxley Act Whistleblower Protections: What Employees Need to Know

SOX is a federal law that applies to publicly traded companies and their affiliates. Its primary purpose is to ensure the accuracy of corporate disclosures and protect investors from fraudulent financial reporting.

Key provisions include:

• Section 302 – Certification of financial reports by CEOs and CFOs
• Section 404 – Requirements for internal controls over financial reporting
• Section 806 – Whistleblower protection
• Creation of the PCAOB – Oversight of external auditors

Section 806 protects employees who report conduct they reasonably believe constitutes:

• Securities fraud
• Mail fraud
• Wire fraud
• Bank fraud
• Violations of SEC rules or federal laws related to shareholder fraud

Covered individuals include employees of:

• Public companies (issuers under Section 3 of the Securities Exchange Act of 1934)
• Wholly owned subsidiaries
• Contractors, subcontractors, and agents of public companies

Remedies for retaliation:

• Reinstatement with the same seniority status
• Back pay with interest
• Compensatory damages (including emotional distress and reputational harm)
• Attorneys’ fees and litigation costs

Both SOX and the FCA are essential federal laws protecting whistleblowers, but they operate in different arenas. SOX protects investors and markets; the False Claims Act (31 U.S.C. §§ 3729–3733) protects taxpayers and government funds.

In a key 2024 decision, Murray v. UBS Securities, LLC, the U.S. Supreme Court ruled that whistleblowers under SOX do not need to prove retaliatory intent by their employer. Instead, they must only show that their protected activity was a contributing factor to an adverse employment action.

Impact: The Murray decision lowers the burden of proof for whistleblowers and strengthens protections under Section 806.

Although SOX does not provide direct financial incentives for whistleblowers, individuals may still receive substantial monetary awards under the Dodd-Frank Act if they report violations to the U.S. Securities and Exchange Commission (“SEC”).

To qualify:

• The information must be original and lead to an enforcement action with sanctions exceeding $1 million.
• Awards range from 10% to 30% of the monetary sanctions collected.

SOX and the False Claims Act (“FCA”) serve different constituencies but share a unified purpose: promoting transparency and accountability.

• SOX protects shareholders and financial markets
• FCA protects taxpayers and government funds

In many cases—especially involving publicly traded government contractors—both laws may apply, and dual protections can be leveraged.

Emerging trends:

• AI-driven auditing and fraud detection: Companies are increasingly using real-time monitoring tools to flag irregularities.
• Expansion of SOX-like requirements: Laws governing ESG disclosures, cybersecurity, and data privacy may soon carry similar internal control requirements.
• Global influence: SOX principles are being adopted in other jurisdictions as models for investor protection.

In many instances, False Claims Act cases are filed with the U.S. Attorney General’s office or the DOJ, with Miller Shah lawyers taking the lead or acting as an adjunct to the federal authorities. In some circumstances, we represent the whistleblower in prosecuting the qui tam action independently of the government investigation. Whistleblowers may have approached the federal or state government with information about illegal activity, but they should hire us if they need private representation. We work alongside federal or local prosecutors and protect clients’ interests during the case instead of focusing on a conviction.

The federal False Claims Act has proved to be an effective and powerful tool in fighting Medicare and Medicaid fraud, defense contractor fraud, and other types of fraud perpetrated against the federal government. The qui tam provisions, which allow whistleblowers to file False Claims Act lawsuits against companies and individuals that defraud the government, have been a key ingredient in the False Claims Act’s success, as the federal government has recovered more than $62 billion as a result of qui tam lawsuits since 1986, with whistleblowers’ rewards totaling more than $2.5 billion. In 2019 alone, the government recovered $3 billion through these claims.

Whistleblowers are doing the right thing by coming forward. The money recovered by the government could help people get back to their normal lives and help deter illegal activity in the future. Whistleblowers have prevented more heartache for corporate employees, private citizens, and investors. They deserve that same peace of mind, and we will stand with them every step of the way.

Miller Shah’s attorneys have represented whistleblowers in several significant cases under the False Claims Act. In addition, the firm has significant experience representing clients in qui tam cases brought under similar state laws against companies and individuals accused of defrauding state and local government agencies. The firm currently represents clients in a number of qui tam actions under the False Claims Act and state law, many of which are “under seal.”

If you are considering reporting corporate misconduct or have experienced retaliation after doing so, consulting an experienced whistleblower attorney is essential. Your rights under SOX and related statutes are time-sensitive and complex.

Miller Shah LLP represents employees, executives, auditors, and insiders in whistleblower matters under SOX, the FCA, and other federal and state laws. All consultations are confidential.