Old Story of the \"The

¶ … old story of the "The Emperor's New Clothes" is a perfect analogy for the modern issue of whistle blowing. The boy who 'outed' the Emperor for being naked when everyone else was afraid to speak up, made him a hero in some ways, but a 'scandalmonger' in others. When is it right to stand up and speak the truth for the sake of others, and when is it better to keep your mouth shut for the sake of peace and loyalty? The answers to these questions have both legal and ethical implications.

From an ethical standpoint, whistle blowing is extremely subjective. A great deal depends on the individual's own moral compass, his own set of values and the level of loyalty he feels to his employer. A person who finds themselves torn between his personal feelings of obligation to his employer and his commitment to doing the 'right thing' for the greatest number of people, can be hauntingly ambiguous. From a legal standpoint, subjectivity is still a factor, however, the legal directives are much more clear and objective than the ethical issues.

The Sarbanes-Oxley Act of 2002 is the most notable legal resource for whistleblowers because it specifically states that retaliation against whistleblowers is illegal and subject to both a monetary fine and up to ten years in prison. Section 1107 of the SOX 18 U.S.C. § 1513(e) states that "Whoever knowingly, with the intent to retaliate, takes any action harmful to any person, including interference with the lawful employment or livelihood of any person, for providing to a law enforcement officer any truthful information relating to the commission or possible commission of any federal offense, shall be fined under this title, imprisoned not more than 10 years, or both" (cited in Kohn, 2008).

The Sarbanes-Oxley Act's predecessor, the Whistleblower Protection Act of 1989, only protected government employees. However SOX is designed to protect any type of corporate employee who works for a publicly traded company. In addition, "As part of the mandated audit committee function, publicly traded corporations must also establish procedures for employees to file internal whistleblower complaints, and procedures which would protect the confidentiality of employees who file allegations with the audit committee" (Kohn, 2008).

The effectiveness of SOX in regard to how well it actually protects whistleblowers is an ongoing matter of debate. According to Moberly (2007) "during its first three years, only 3.6% of Sarbanes-Oxley whistleblowers won relief through the initial administrative process that adjudicates such claims, and only 6.5% of whistleblowers won appeals through the process... administrative decision makers strictly construed, and in some cases misapplied, Sarbanes-Oxley's substantive protections to the significant disadvantage of employees" (p. 65).