Cornell University

Note

Hold The Whistle, Start Training: Circumventing Distortion Of Sarbanes-Oxley Whistleblower Protections Through Common-Sense Employee Education

Brendan W. Klein

J.D., Cornell Law School, 2026; B.S. in Industrial and Labor Relations, Cornell University, 2023.

The author expresses his gratitude to John Crain, whose encouragement and mentorship inspired this Note. The author also thanks Professor Stewart J. Schwab for his feedback, and the editors at the Cornell Law Review for their diligence and hard work in bringing this Note to completion.

30 Jul 2026

Section 806 of the Sarbanes-Oxley Act protects employees of publicly traded companies from retaliation by their employers for reporting conduct that they reasonably believe constitutes shareholder fraud or a violation of U.S. securities law. This protection empowers employees with knowledge of past, ongoing, or likely future fraud to “blow the whistle” by sharing that information with regulators, legislators, or supervisors without fear of reprisal. Like other sections of the Sarbanes-Oxley Act, the ultimate goal is to discourage, identify, and terminate fraud in public companies, thereby avoiding or mitigating harm to their respective shareholders. Early interpretations of Section 806 by the Department of Labor’s Administrative Review Board (ARB) fairly balanced the interests of the public, employers, and employees. With the ARB’s guidance, courts protected whistleblowers whose reports demonstrated an objectively reasonable belief of an existing or imminent violation of securities law. However, an abrupt reversal by the ARB following a partisan presidential transition has tempted some courts to stretch the meaning of protected reporting activity beyond the intent of Section 806. Specifically, the Third and Sixth Circuits have found that an employee may be protected even if the allegations in her report fail to approximate elements of shareholder fraud or a violation of securities law. These expansions virtually eliminate the Section’s reasonable belief requirement, rewarding reckless, premature complaints and threatening to drown out reporting activity that promotes the Act’s policy goals. To avert judicial overreach in the scope of protected activity, this Note suggests that regulators develop a model policy, procedures, and training for key employees at large public companies to properly identify and report potential fraud. Such programs already complement other workplace laws and would promote the goals of Section 806 without unduly burdening employers or the public with inadequate and wasteful reporting activity.

To read this Note, please click here: Hold The Whistle, Start Training: Circumventing Distortion Of Sarbanes-Oxley Whistleblower Protections Through Common-Sense Employee Education