Problem
The CFO of a listed NYSE company is required to certify financial statement reliability per the Sarbanes Oxley Act... assuming these statements are in fact reliable. Signing off on these statements is a criminal offense equivalent to perjury. Joe CFO feels the company's internal controls are not reliable but is pressured to sign off on them anyway.
If Joe CFO signs off on these statements he gets to keep his job and his stock price will increase. If however, he refuses he will lose his job and the stock price will decrease.
Joe CFO wrote the company's Audit Committee and Board of Directors outlining three areas where internal controls were materially weak. Joe also stated he could not sign off on the financial statements until these weaknesses were addressed. He was promptly escorted from the building, fired. The stock dropped 30% immediately.
Joe CFO subsequently files a whistleblower lawsuit and finds that the company has severely "slandered" his name, questioning his motivations. Essentially accusing him of blackmail, and of course the company claims that the internal controls were adequate.
Answer the following using your textbook. Cite the page number. (20 points)
1. Does Joe CFO qualify as a whistleblower under federal securities law?
2. If Joe CFO had signed the company's SEC filing despite knowing that there were substantial internal control weaknesses, what would be the potential penalties?
3. Does Joe CFO qualify for anti-retaliation protections under federal securities law?