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Whistleblower Mark Livingston Battles Wyeth Pharmaceuticals

By       Message Evelyn Pringle       (Page 1 of 7 pages)     Permalink    (# of views)   No comments

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Washington DC Attorney, Jason Zuckerman, says a positive result of the recent corporate scandals is the recognition of the value of whistleblowers in exposing fraud, corruption, and other wrongdoing within a company.

As a result of a shift in the public's perception, he says, some whistleblowers are viewed as heroes for taking on powerful corporations like Enron and serving the public interest. “The recent trial of Kenneth Lay was a reminder that a whistleblower, in that case Sherron Watkins, had warned senior management that the company would implode in a wave of accounting scandals. Had management taken her concerns seriously and implemented appropriate corrective action," he notes, "Enron might not have collapsed.”

"This enhanced public perception," Zuckerman says, "coupled with the substantial remedies available to whistleblowers, provides an incentive for employees who have suffered retaliation for exposing fraud to bring claims under the Sarbanes-Oxley Act, which contains a whistleblower protection provision.”

Zuckerman admits that battles against drug companies are extremely difficult. "I can tell you that whistleblowers in the pharmaceutical industry really face an uphill battle, a David versus Goliath struggle," he says.

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"Some pharmaceuticals are obsessed only with the bottom line," he notes, "and they are determined not to let a whistleblower get in the way."

"My clients who have tried to raise concerns to management about Medicate fraud, off-label marketing, and other improprieties" he says, "often come under attack and are either terminated or forced out."

"Sadly," Zuckerman says, "management often adopts a shoot-the-messenger mentality towards whistleblowers, and that is why we need to vigorous enforcement of whistleblower protection laws."

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A SOX action against a drug giant, is currently underway in a North Carolina involving Mark Livingston, a former associate director of training at a Wyeth vaccine manufacturing plant in North Carolina, who says he was fired for raising concerns that vaccine production employees were not properly trained, in violation of FDA regulations, and a consent decree previously imposed on Wyeth by the FDA.

Whatever the outcome of the case, attorneys say it will be an important decision due to the fact that it will be one of the first cases decided by a federal court under the Sarbanes-Oxley Act.

Sarbanes was signed into law on July 30, 2002, and provides a tool for the vigorous enforcement that Zuckerman says is needed. Coming on the heels of the WorldCom, Enron and Author Andersen scandals, the Act was intended to restore investor confidence in publicly traded companies by improving corporate accountability through changes in corporate governance and accounting practices and by providing whistleblower protection to employees who report fraud.

The Act's official title is the "Public Company Accounting Reform and Investor Protection Act of 2002," but is commonly called SOX. The law is named after its sponsors Senator Paul Sarbanes (D-MD) and Representative Michael G Oxley (R-OH).

The Act "mandated a number of reforms to enhance corporate responsibility, enhance financial disclosures and combat corporate and accounting fraud, and created the "Public Company Accounting Oversight Board," also known as the PCAOB, to oversee the activities of the auditing profession," according to the Security and Exchange Commission.

SOX applies to all companies that have obtained a listing in the US or have registered securities with the Security and Exchange Commission and as of this year, all publicly-traded companies are required to submit an annual report on the effectiveness of their internal accounting controls to the SEC.

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To add teeth to the Act, the SEC adopted new rules that apply to top management officials including: (1) requiring Chief Executive Officers and Chief Financial Officers to certify information in company quarterly and annual reports; (2) requires management to return bonuses or profits from stock sales received within 12 months of a restatement resulting from material non-compliance with financial reporting requirements as a result of misconduct; (3) prohibiting company officers from trading during pension fund blackout periods; (4) prohibits companies from making loans to insiders; (5) accelerated deadlines and mandated electronic filing of disclosures of insider transactions in company stock; (6) disclose whether they have a code of ethics for CEO, CFO and senior accounting personnel.

SOX is one of 14 whistleblower laws passed since 1974, however, most of the previous laws applied to specific areas such as nuclear materials; water and air pollution, airline, trucking and shipping safety; and abuse of migrant workers.

Another feature of SOX whistleblower protection is that it contains both civil and criminal provisions and creates a civil cause of action for whistleblowers who have been subject to retaliation.

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Evelyn Pringle is a columnist for OpEd News and investigative journalist focused on exposing corruption in government and corporate America.

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