In the early 2000s, corporate and accounting scandals involving Enron, Tyco, WorldCom, and other publicly traded companies cost investors billions of dollars and prompted federal legislation to reform corporate financial practices. The Sarbanes-Oxley Act (SOX) covers everything from mandatory financial disclosures to enhanced penalties for white-collar crime to requiring a company’s CEO to sign corporate tax returns. The law also includes penalties for retaliating against whistleblowers who provide information or assist in federal investigations.
Generally, SOX applies only to publicly traded companies. However, in a surprisingly entertaining opinion (at least when corporate governance and ethics are concerned), the U.S. Supreme Court expanded the law’s antiretaliation provisions to some private employers—specifically, to contractors and subcontractors performing work for publicly traded companies.