Potential whistleblowers might think twice before reporting suspected corporate malfeasance in the face of a recent study that indicates promised protection isn't what it's cracked up to be. After reviewing 491 whistleblower complaints filed with the Department of Labor between 2002 and 2005, Richard E. Moberly, an assistant professor of law at the University of Nebraska College of Law, found that only 3.6% of the 361 cases that were decided by the Department of Labor proved they were unfairly published after revealing potentially damaging information about their employers, and only 6.5% of the 93 who appealed to DOL judges emerged victorious. "It's not working the way people expected it would," says Moberly, who contends the Occupational Safety and Health Administration (charged by the DOL with resolving the disputes) advocates a "narrow reading" of the law.

Attorney Jason Zuckerman, a lawyer with The Employment Law Group that represents SOX whistleblowers, would agree. Zuckerman argues that while Section 806 of SOX states that an employee need only have a "reasonable belief" of misconduct, department officials are demanding a "smoking gun," meaning unequivocal evidence. For example, in one of the more nuanced provisions of the law, says Moberly, an employee reporting insufficient internal controls might have to prove that the deficiency they are reporting will ultimately hurt share value. Public interest groups such as the Government Accountability Project (GAP), say this undercuts the intention of SOX and raises the burden of proof. Also, GAP argues, a 90-day statute of limitations unfairly keeps complaints at a minimum.

But even Moberly concedes that the numbers don't tell the whole story. Not included in the previously undisclosed data that Moberly obtained through a Freedom of Information Act request, are 99 cases that were settled for undisclosed amounts. And attorney Michael Delikat, head of the employment law practice group at Orrick, Herrington & Sutcliffe, takes it one step further: The cases that make it to OSHA are "just the tip of the iceberg." Many more, he says, are resolved in pre-filings. Moreover, Delikat contends that a number of employees who identify themselves as whistleblowers are simply disgruntled or fired workers determined to make trouble for a company, and still others raise complaints that fall outside the jurisdiction of the statute, and have nothing to do with alleged fraud or other actions that could hurt shareholders.

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