When the Securities and Exchange Commission came under congressional fire this year for its handling of an insider trading probe into hedge fund Pequot Capital, Senator Charles Grassley said the episode showed that whistle-blowers were "as welcome as a skunk at a picnic".
The SEC denied suggestions it had blocked a whistle-blower, Gary Aguirre, from pursuing the probe into Pequot - one of the senator's suspicions at the time.
Anyone looking for evidence that the system is still stacked against corporate whistle-blowers might take comfort from a study just out in the US.
A University of Nebraska College of Law examination of decisions from "administrative hearings" into cases brought by whistle-blowers in the three years since the passage of Sarbanes-Oxley in 2002 shows that a mere 3.6 per cent of cases were won by employees.
Robust anti-retaliation provisions in Sarbox were supposed to have made it easier for whistle-blowers to raise concern over possible accounting and securities fraud after the Enron and WorldCom scandals.
The findings could resonate amid the subprime crisis as regulators are on heightened alert for fraud.
The suspicion is that mortgage originators mis-sold products and securities were improperly packaged and sold to investors.
The study looked at 700 cases where employees experienced retaliation from companies for whistle-blowing.
In the first three years since Sarbox, employees filed 491 complaints with the US Department of Labor's Occupational Safety and Health Administration, the agency charged with initially investigating such complaints.
OSHA resolved 361 of the cases, with only 13 going in favour of staff.
Only 6.5 per cent of whistle-blowers won appeals to the department's judges.
Richard Moberly, the study's author, argues the findings "challenge the hope of scholars and whistle-blower advocates that Sarbanes-Oxley's legal boundaries and burden of proof would often result in favourable outcomes for whistle-blowers".
The Government Accountability Group, a non-profit organisation that lobbies for whistle-blowers, described Sarbox in 2002 as "a revolution in corporate governance freedom of speech". Its president, Louis Clark, now says it is "a disaster".
Whistle-blowers struggle to win cases because OSHA and judges who hear claims and appeals have tended to reject them either on a narrow reading of procedure or after deciding that claims "fail to fit within the exact legal parameters of a Sarbanes-Oxley claim", the study says.
Jason Zuckerman, a lawyer at The Employment Law Group, a law firm that represents Sarbox whistle-blowers, says: "Part of the problem is that investigators misunderstand the relevant legal standards and believe that a complainant must have a smoking gun - that is, unequivocal evidence proving retaliation."
He also says judges have amended the law's "reasonable belief" standard that whistle-blowers need to bring a case of suspected fraud to the point that they "have to report an actual violation" - which can be hard if an employee does not have all the evidence.
Yet lawyers who have acted for companies in such cases say a lot of cases are settled before reaching OSHA and should be taken into account in any assessment of Sarbox's success.
Dan Westman, a partner at Morrison & Foerster, points out that the Nebraska study does not include this. Yet many companies settle with complainants - confidentially.
"My gauge of success is not how many whistle-blowers win their cases because my assumption is only the weakest of cases go to litigation because companies will try to resolve them if they have any strength of merit at all," he says.
OSHA says any calculation of "wins" for whistle-blowers should include occasions where a whistle-blower settles a case after submission to the department, but before investigations begin.
That takes the number of cases "with outcomes favourable to complainants" this fiscal year to 18 per cent.
The agency believes Sarbox has made it easier for people to bring claims based on retaliation for disclosing corporate fraud.
"Prior to the enactment of Sarbanes-Oxley's whistle-blower protection provisions, employees who exposed corporate fraud were protected under a patchwork of various state laws," it said.
- 208 Regulation