However, all cases of so called insiders or whistle-blowers are not quite as dramatic as Mr. Wigand's. What exactly is a whistle-blower? A whistle-blower is simply a person with a conscience who stands up and says that a wrong has been committed by his current or former employer. Oftentimes, whistleblowers report accounting errors or fraud to the SEC (Securities and Exchange Commission). Because they are worried about their stock prices, companies will sometimes submit fraudulent reports and occasionally people in the know will step forward to question the authenticity of these statements.
As a result of the numerous accounting scandals, the Congress passed the Sarbanes-Oxley Act of 2002 or SOX. The goal of the act is to protect investors from fraudulent accounting statements. It is a direct result of huge public accounting scandals like Enron, WorldCom, and Adelphia. These scandals cost investors tens of billions of dollars by falsely inflating stock prices until the truth finally came out and average investor lost their shirts.
Though many informed individuals still debate the benefits of the act, there is no doubt that it has restored some of the confidence that was lost by the public in recent years. The law also requires that the SEC comply with a slew of new requirements that include criminal penalties and fines.
Lastly, the act created a new agency know as the Public Company Accounting Oversight Board, whose job it is to oversee, inspect and regulate accounting firms who are employed by public companies.
In the years since SOX was enacted, it has been used several times by whistleblowers who claim that their companies were providing inaccurate accounting information. In fact, the only requirement of the new law is that an employee "reasonably believed" that such fraud was taking place. This stipulation has convinced a number of brave individuals to step forward and accuse their current or former employers of intentionally deceiving the public.
Though the new has been effective in several court cases, the informant or whistleblower doesn't always fare so well. As you might remember from the movie, the main character from the Insider had his good name sullied, his marriage destroyed, and his employment options severely limited. The simple fact is that corporations have a lot of power and influence and once you cross them they will most assuredly take the gloves off and do everything they can to assault your character and reputation. And as effective as Sarbanes-Oxley has been, it does not have control over public opinion or the press.
In the end, the decision to come forward and point the finger is a personal one that must be made by an employee and his family. However, the new law does make a little bit easier for decent people to actually do the right thing.
