Whistleblowing And Sarbanes Oxley Act Research Papers Examples
There are certain individuals who feel strong about ethics and values. Individuals who reflect ethical concerns against the organization for which they work are often termed as whistleblowers. These people are different from pressure groups and trade unions because they are from within the organization. However, they may raise their voices within the organization, but if the issue is still not addressed they may turn to external forces (EthicalSystems.org). The issues may include law violation, rules, and regulations violation, pose a threat to the company’s stakeholders, fraudulent activities, health and safety concerns, and corruption. The whistleblower may have to face reprisal from his/her colleagues because he gives greater importance to his personal values and ethics rather than the well-being of the firm. As whistleblowing may be against the company’s image and market value if the whistle blower’s claims are not justified he/she may experience the reprisal from the law. Whistleblowers often feel that it is their duty to raise their voice against unethical or illegal activities because eventually it would result in personal gain. The most common situations, where whistleblowers are mostly found, is in environments where management and employees support strong ethics and values. One of the most prominent trait common amongst most whistleblowers is that they are altruistically motivated. Moreover, these individuals are professionally and intellectually groomed.
Whistleblowers justify their behavior as linking it to ethical practices. However, because of their strong desire to be ethical, they may also be faced with harsh consequences within their organizations and amongst their co-workers. For instance; these individuals may be forced to resign or may even be fired if the organization’s policies permit, or they could be demoted if they cannot be fired. People find it hard to trust whistleblowers; thus, the individual also loses his/her credibility by indulging in such behavior. The hierarchy of needs as proposed by Herzberg suggests that whistleblowers may be sidelined, and the social needs may not be met which would create motivational problems. If the consequences for the organization have to be taken into consideration, then it is important to note that there would be a significant loss of revenue for the firm. Customers are now conscientious, and they are willing to switch to a competitor who is viewed as ethical and responsible towards the environment, as well as its own employees. Employees, who are not in alignment with company values, should seek employment in the firm whose values coincide with their own value system. The company may thus lose out talented workers because of the unethical practices it has adopted.
One of the leading companies in the financial industry is; JP Morgan. It is a multinational organization and deals in millions of dollars often equivalent to the budget of some small countries. The core activity of the organization is to provide financial products and professional financial consultancy to its customers. Even though the organization is spread over several counties they were reported as being involved in the manipulation of mortgages for over a decade. In other words, the company was submitting thousand of mortgage reports to the FHA and these did not qualify for government guarantees. The individual responsible for raising this matter in from of the US district court in Manhattan was Keith Edwards. Consequently, Edwards was paid USD 63.9 million in March, which was also considered as the prize money for raising his voice against this activity. The prize money was given in March 2014 once JP Morgan agreed to have manipulated the mortgage reports and blamed it upon their internal reporting system (Stempel, 2014). Edwards was an employee of JP Morgan, and it sued the company in 2013 when he found out how the company was playing with the mortgage numbers. Consequently, JP Morgan has now agreed to enhance and develop the quality control departments which would ensure future discrepancies do not seep into the organization again (Chaudhri. 2014). In the JP Morgan case, Edwards claims were justifiable because if these were not reported to time it could have led to a crisis similar to the one faced in 2008. In case the issue was not brought to notice JP Morgan would have continued to have an illegal advantage over other financial institutions, and the government would have been continued to be fooled by the organization.
The Sarbanes-Oxley Act provides protection to the whistleblowers of public limited companies. The act says that if an employee who correctly reports an instance would earn a certain percentage of the recovered amount. The US government has been able to bring into notice illegal activities of publicly traded organizations. However, the act also covers many activities and claims them to be legal; therefore, a very restricted number of activities come under as being illegal or unethical. Edwards was under the protection of the Sarbanes-Oxley Act because JP Morgan was misrepresenting figures while working with governmental institutions; thus, he was favoring the government.
Chaudhri, S. (n.d.). J.P. Morgan Whistleblower Gets $64 Million. Law Blog RSS. Retrieved January 20, 2015, from http://blogs.wsj.com/law/2014/03/07/j-p-morgan-whistleblower-gets-64-million-2/
Stempel, J. (2014, March 7). JPMorgan whistleblower gets $63.9 million in mortgage fraud deal. Reuters. Retrieved January 20, 2015, from http://www.reuters.com/article/2014/03/07/us-jpmorgan-whistleblower-idUSBREA261HM20140307
Whistle Blowing | Ethical Systems. (n.d.). Whistle Blowing | Ethical Systems. Retrieved January 20, 2015, from http://ethicalsystems.org/content/whistle-blowing