Two little-noticed provisions of the recently-enacted Sarbanes-Oxley Act of 2002 (the "Act") have changed that. One of the provisions, Section 806 of the Act, relates specifically to violations of the Federal statutes relating to fraud and provides for a civil remedy. The other provision, Section 1107 of the Act, pertains to violations of any Federal law, rule or regulation and provides for fines and imprisonment of offenders.

The Act, which was signed into law by President Bush on July 30, 2002, is a watershed piece of legislation that addresses many problems that have come to light this past year in the corporate scandals involving Enron Corp., Worldcom Inc., Adelphia Communications Corp. and other prominent companies. While the principal focus of the Act is corporate compliance with the Federal securities laws, the Act also affects the Bankruptcy Code, the Employee Retirement Income Security Act (ERISA), and other areas, including Federal laws relating to obstruction of justice. (See the separate article dealing with those other issues of the Act in this issue.)

Section 806 of the Act prohibits public, reporting companies and their officers, directors, employees and other agents from retaliating against any employee by discharging, demoting, suspending, threatening, harassing or otherwise discriminating against the employee in the terms of employment for providing information or assisting an investigation conducted by a Federal agency, Congress or a person with supervisory authority over the employee regarding conduct the employee reasonably believes is a violation of Federal law prohibiting mail fraud, fraud by wire, radio or television, bank fraud or securities fraud. Employees are also protected if they file, testify or otherwise participate in a proceeding relating to any such violation.

Section 806 creates a private right of action on the part of the employee. The employee must first file a complaint with the Secretary of Labor within 90 days of the retaliatory action. The employee may seek reinstatement and back pay, as well as any other damages necessary to make him or her whole, including litigation costs, expert witness fees and attorneys' fees. If the Secretary of Labor does not issue a final decision in the case within 180 days after the complaint was filed, the employee may bring an action in Federal district court.

Section 806 is codified as Section 1514A of Title 18 of the United States Code.

Section 1107 of the Act amends Section 1513 of Title 18 to provide simply that any person who, with the intent to retaliate, takes any action harmful to a person for providing truthful information to a law enforcement officer relating to the commission or possible commission of any Federal offense will be fined or imprisoned for up to 10 years, or both.