A Mismatched Pair of SOX: The Split Over the Whistleblower Exhaustion Requirement

Nikhil B. Mathur

The early 2000s is a period of time referred to by some as a “golden age” for accounting fraud, characterized by complex and high-profile accounting fraud cases involving some of the era’s biggest corporations. Among the most infamous were the Enron and WorldCom scandals of the early 2000s. The Sarbanes-Oxley Act (“SOX” or the “Act”) of 2002 was a pivotal piece of legislation enacted in the wake of these events, designed to hold corporations accountable for their misconduct. A cornerstone of the Act is a series of protections for employee whistleblowers who report instances of fraud or misconduct. This Comment addresses both the historical context and current state of SOX whistleblower protections, with particular focus on the circuit split regarding the treatment of whistleblower retaliation actions where the complainant has not exhausted their available administrative remedies. This split creates notable uncertainty for whistleblower complainants, as identical claims may be heard and potentially upheld in one jurisdiction while being dismissed in another.  Part I of this Comment explores the events leading up to the passage of SOX and delves into the specific provisions of 18 U.S.C. § 1514(A) that are at the heart of the jurisdictional split. It then analyzes key cases that have contributed to this split.  Part II of this Comment proceeds to analyze the legal methodologies and reasoning employed in these cases that led to the circuit split over SOX’s exhaustion requirement. This Comment concludes by proposing a solution for the Supreme Court of the United States to reconcile the conflicting interpretations and provide clarity on the issue.