There is a lot of money you can make in investing, which is why the government regulates this industry so heavily. There are many watchdogs making sure the industry stays fair and balanced. While you may understand some of the laws that keep the industry on track, one you may not think about often is the Sarbanes-Oxley Act. This act is helpful to investors like you in Michigan and throughout the country.
According to the National Whistleblower Center, the Sarbanes-Oxley Act protects employees who report wrongdoings within their companies that violate the regulations set by the Securities and Exchange Commission. This law goes beyond protecting the whistleblower, though. It also protects you as an investor from shady business practices that could cost you money.
With no protection, people may not tell
If an employee sees some underhanded deals or an outright violation of regulations, he or she might not be so quick to act on it and alert authorities if there was nothing to protect him or her from retaliation. People naturally do not want to lose their jobs. Reporting an employer for breaking the law is something that could cause a lot of backlash, but with SOX in place, employees do not have to worry. This means they are more likely to report wrongdoing.
Since SOX encourages employees to report anything they see and protects them if they do, it helps bring to light serious situations. Insider trading, illegal deals or other actions that could affect the price of stocks occur all the time in business. If left unchecked, they can greatly impact your bottom line and make it tough for you to make money investing.
SOX on the surface may just seem like an employee protection law, but it goes far beyond that when you realize its protections also impact you. Without this act, you could feel the ramifications of an unwatched industry.