Assignment 1 Legal 500 Whistleblowing and Sarbanes-Oxley

Assignment 1 Legal 500 Whistleblowing and Sarbanes-Oxley

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  Running head: WHISTLEBLOWINGAND SARBANES-OXLEY 1 Whistleblowing and Sarbanes-Oxley William M. Parker II Professor Geronda Carter, J.D. Legal 500 Law, Ethics & Corp. Governance 1/21/2016
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  WHISTLEBLOWING AND SARBANES-OXLEY 2 Describethe key characteristics of a whistleblower, and briefly summarize one (1) researched instance of whistleblowing in one (1) publicly traded company within the last 12 months. Include the details of the issue that the whistleblower reported and the effect of the whistleblower’s actions on both the whistleblower himself and the company. Whistleblower The characteristic of a whistleblower is someone who witnesses unethical behavior at work. A whistleblower can work for a private company, nonprofit organization or the government (Hill, Ingulli, & Frey, 2015). They often are caught between the loyalties of their organization and their own self-conscious. Next they will report the unethical activities to their supervisors, regulators or the media (Hill, Ingulli, & Frey, 2015). As a result of them whistleblowing, they can cause damaging repercussions to themselves and their families. Publicly Traded Company All publicly traded companies are highly regulated and must get approval from their shareholders for operations, financial performance, and management decisions. The New York Stock Exchange or NASDAQ is where their stock is traded. Being on the stock exchange is a quick way for a company to raise large amounts of capital from investors (“Public,” 2015). American investors build savings; investment and retirement plans from gains earned in stock the market. Whistleblowing In early 2014, transport campaigners Peter Mock and John German began testing car emissions to prove to Europe that the US could make clean diesel. They collaborated with West Virginia University and drove their cars 1300 miles from San Diego to Seattle. Their goal was to
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  WHISTLEBLOWING AND SARBANES-OXLEY 3 driveon the road rather than in the lab to show that emission-busting technology didn’t affect performance. When the results came back, the Volkswagens were pumping out dangerous levels of toxins 35 times higher than the legal limit (“Volkswagen Scandal,” 2015). Both Mock and German coincidentally discovered one of the biggest automobile scandals in years. They found out Volkswagen was systematically rigging emissions tests by using illegal software called ‘defeat’ (“Volkswagen Emissions,” 2015). The pair then contacted the California Air Resource Board and the US Environment Protection Agency, and the investigations began. Decide whether or not the whistleblower was justified in reporting the company’s actions. As a result, of their whistleblowing, Peter Mock, and John German have been coined as heroes. They have appeared on TV, news channels, and radio shows to share their story. Their lives will never be the same now that they are unlikely media stars who were initially automotive engineers that were thrust into the global spotlight (“Meet,” 2015). Mock and German have forced Volkswagen to admit they installed ‘defeat’ devices in 11 million cars, the CEO and former chairman of the board of directors of Volkswagen AG Martin Winkterkorn has resigned, and the company’s market value has lost $26.8 billion dollars (“Meet,” 2015). Volkswagen has lost its consumer’s trust in their brand, cars, and technology. Before the emissions scandal, they were the world’s largest automaker. They led in market capitalization of $126 billion dollars, annual sales of $269 billion dollars, and employed 593,000 employees (“How,” 2015). Now the US, Germany, European Commission, and Korean officials have decided to open up investigations into Volkswagen’s illegal emissions activity. Mock and German forced the automotive industry to acknowledge the need for a balance between engine performance and pollution control (“Volkswagen Emissions,” 2015). The auto industry must take emissions testing seriously, or accept the consequences of putting the public’s
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  WHISTLEBLOWING AND SARBANES-OXLEY 4 healthat risk. Over time, these risks could also cause catastrophic and irreversible effects on the planet such as rising sea levels, polar melting, droughts, floods and extreme weather conditions (“Record,” 2014). Besides protecting the environment, Mock and German were advocates for consumers by forcing Volkswagen to recall 11 million cars. Volkswagen then had to repair their cars and image in the eyes of their customers and dealership partners (“How,” 2015). The efforts of the whistleblowers have opened up questions about whether other car manufacturers are following all of their required emissions regulations. Examine the extent to which the whistleblower would be protected under the Sarbanes- Oxley Act. The Sarbanes-Oxley-Act is a law created to prevent corporate fraud. It prohibits public companies from discriminating against any employee who lawfully assists in providing information in the investigation of conduct that the employee reasonably believes constitutes a violation of federal securities laws (Hill, Ingulli, & Frey, 2015). In the case of the Volkswagen scandal, it addressed cars, emissions, and air pollution. The Sarbanes-Oxley Act would not apply to Peter Mock and John German as whistleblowers. The statute only protects employees of the corporation that feel they are being retaliated against by their employer after they perceive a violation of federal securities laws (“Whistleblower,” 2007). Because of this German and Mock are safe. John German and Peter Mock’s case of whistleblowing is unique because they were not employees of a Fortune 500 company. They are simply researchers working at a 12 million dollar a year nonprofit and at a land grant university with a budget of 4 million dollars a year (“How,” 2015). Their story is incredible because they were able to stop the world’s largest automaker from defrauding their customers and ultimately polluting the environment.
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  WHISTLEBLOWING AND SARBANES-OXLEY 5 References Halbert,T., Ingulli, E., & Frey, M.A. (2015). Law and ethics in the business environment with readings from essentials of contract law. Mason, OH: Cengage Learning. How Two Dogged Clean Air Sleuths Exposed Massive VW Deceit (2015). Environmental Working Group. Retrieved from http://www.ewg.org/enviroblog/2015/09/how-two- dogged-clear-air-sleuths-exposed-massive-vw-deceit Meet John German: the man who helped expose Volkswagen’s emissions scandal. (2015). Guardian News and Media Limited. Retrieved from http://www.theguardian.com/business/2015/sep/26/volkswagen-scandal-emissions-tests- john-german-research Public Companies Trying to Mimic Private Firms. (2015). The New York Times Company. Retrieved from http://www.nytimes.com/2015/11/05/business/dealbook/public- companies-trying-to-mimic-private-firms.html?_r=0 Record CO2 Emissions Committing World to Dangerous Climate Change. (2014). Guardian News and Media Limited. Retrieved from http://www.theguardian.com/environment/2014/sep/21/record-co2-emissions- committing-world-to-dangerous-climate-change Volkswagen Emissions Scandal: Is My Car Affected?. (2015). Telegraph Media Group Limited. Retrieved from http://www.telegraph.co.uk/news/uknews/road-and-rail- transport/11881670/Volkswagen-emissions-scandal-is-my-car-affected.html Volkswagen Scandal: How Two Campaigners Exposed the World’s Biggest Car Company.
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  WHISTLEBLOWING AND SARBANES-OXLEY 6 (2015).Telegrah Media Group Limited. Retrieved from http://www.telegraph.co.uk/news/uknews/road-and-rail-transport/11883343/volkswagen- scandal-campaigners-expose-world-biggest-car-company.html Whistleblower Protections Under the Sarbanes-Oxley Act: A Primer and A Critique. (2007). Fordham Journal of Corporate & Financial Law, 12 (5), 831-839. Retrieved from the Strayer University database.
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  WHISTLEBLOWING AND SARBANES-OXLEY 6 (2015).Telegrah Media Group Limited. Retrieved from http://www.telegraph.co.uk/news/uknews/road-and-rail-transport/11883343/volkswagen- scandal-campaigners-expose-world-biggest-car-company.html Whistleblower Protections Under the Sarbanes-Oxley Act: A Primer and A Critique. (2007). Fordham Journal of Corporate & Financial Law, 12 (5), 831-839. Retrieved from the Strayer University database.