Corporate Executives To Be Held Accountable for Financial Fraud – New Whistleblower Protections Adopted
Sacramento – Today, the California State Senate approved a new bill designed to hold executives, like former Enron executives, accountable for financial fraud that they knew of but did not report. SB 1452 (Senator Escutia – D), sponsored by the Foundation for Taxpayer and Consumer Rights (FTCR), also creates a confidential Whistleblower Hotline and adds new protections for employees who blow the whistle on companies that break the law. As California sets the national standard for corporate reform, the U.S. Congress has failed to approve any of the nearly 50 Enron-reform bills introduced over the last several months.
“Executive silence must be punished and whistleblower speech must be protected,” said Doug Heller, a Consumer Advocate for FTCR. “This is a landmark shift of public policy in response to the Enron debacle and should be adopted as a national model.”
Consumer advocates have argued that such protections are of critical importance in light of the fact that half of adult Americans are invested in the stock market, either directly or through their retirement accounts. The recent Enron collapse and similar problems at the Tyco, Adelphia and Global Crossing demonstrate the devastation that corporate fraud has on retirees’ and investors’ livelihoods. SB 1452 makes executives who do not report known violations of financial fraud laws liable for fines of up to $100,000 per incident. The bill will next be heard in the Assembly Judiciary Committee.
“This proposal creates an early warning system to protect the public from the next corporate scandal,” said Heller.