CEA Whistleblower Protection & Reporting 2

Question 1

Under the Sarbanes-Oxley Act (SOX), which employees are protected when reporting suspected securities fraud?

Accepted Answer

Employees of publicly traded companies who report to supervisors, regulators, or Congress

Answer

SOX Section 806 protects employees of publicly traded companies who report fraud to supervisors, federal agencies, or members of Congress.

Question 2

What does 'reasonable belief' mean in the context of whistleblower protection?

Accepted Answer

The whistleblower must subjectively and objectively believe misconduct occurred

Answer

Reasonable belief requires both a subjective (genuine) belief and an objective (reasonable person) standard that a violation occurred.

Question 3

Which federal law specifically protects employees who report violations of federal tax laws to the IRS?

Accepted Answer

IRS Whistleblower Program under IRC Section 7623

Answer

IRC Section 7623 established the IRS Whistleblower Program, which provides financial awards and anti-retaliation protections for tax fraud reporters.

Question 4

A whistleblower reports internally but the company takes no action. What is the BEST next step?

Accepted Answer

Consider escalating to an external regulatory authority

Answer

When internal reporting fails to address misconduct, escalating to an appropriate external regulator is a legitimate and often protected next step.

Question 5

Under Dodd-Frank, what financial incentive is offered to whistleblowers whose tips lead to successful SEC enforcement actions exceeding $1 million in sanctions?

Accepted Answer

10–30% of collected monetary sanctions

Answer

Dodd-Frank entitles qualifying whistleblowers to 10–30% of monetary sanctions collected in SEC enforcement actions exceeding $1 million.

(CEA) Certified Ethics Associate Practice Test

(CEA) Certified Ethics Associate Practice Test

CEA Whistleblower Protection & Reporting 2