United States Legislation

In July 2002, Congress passed the Sarbanes-Oxley Act to increase accountability and transparency in United States public companies in response to corporate scandals at Enron and other major U.S. organizations. Section 301 of Sarbanes-Oxley requires the audit committees of public companies to establish confidential complaint processes for the reporting of auditing and accounting irregularities.

In 2004, the Federal Sentencing Commission revised their Sentencing Guidelines for Corporations in light of Sarbanes-Oxley. The compliance measures that ensure more lenient sentencing for corporate wrongdoing include a recommendation for an internal confidential or anonymous complaint mechanism.

In addition, the Dodd-Frank Act (July 2010) sets up a “bounty program” which allow whistleblowers who report “original” information to the SEC about securities violations to obtain between 10 and 30 percent of any monetary sanctions awarded in excess of $1 million recovered against the company.

The Foreign Corrupt Practices Act (FCPA; 1977) makes it unlawful for a U.S. person, and certain foreign issuers of securities, to make a payment to a foreign official for the purpose of obtaining or retaining business for or with, or directing business to, any person. The Act was updated in 1998 to also apply to foreign firms and persons who take part in corrupt payment activity while in the U.S.. The FCPA also requires companies whose securities are listed in the U.S. to meet its accounting provisions.

Compare the Whistleblower Provisions of Dodd-Frank and SOX

External Resources

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Strengthening Security Through Compliance

Security measures are essential for protecting people, assets and information, and compliance makes sure those measures are effective. A healthy compliance program will bolster your security measures and find weaknesses before they become problems.