Protection afforded to whistleblowers extended under Sarbanes-Oxley Act

The United States Department of Labor's Administrative Review Board recently expanded whistleblower protection under the 2002 Sarbanes-Oxley Act after Dr. E. Patrick McDermott, a professor in the Management and Marketing Department of Maryland-based Salisbury University's Franklin P. Perdue School of Business, offered a convincing argument.

McDermott – a practicing attorney, as well as the director of research and evaluation for the university's Center for Conflict Resolution – argued in favor of two former employees at a pharmaceutical research company.

Clinical research nurse Theresa Neuschafer and case report forms manager Kathy Sylvester – both of whom worked for Parexel International – were fired from the company after alleging that data falsification measures it used during the clinical testing of a drug breached the U.S. Food and Drug Administration's Good Clinical Practices.

The ARB ruled that expressing a reasonable belief of a SOX violation is necessary to engage in protective activity, even when the violation may not actually have occurred.

Sarbanes-Oxley was enacted in 2002 to offer shareholders and the general public protection from fraud and accounting errors. It was passed in the wake of financial scandals such as Enron and WorldCom and established a system of controls, audit solutions, and reporting. 

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