While the first Sarbanes-Oxley whistleblower's quest for reinstatement and backpay has essentially come to an end, another whistleblower is emerging. His quest, however, is a bit different.
William J. McCloskey is a commercial mortgage broker who won protection under the whistleblower provisions of Sarbanes-Oxley even though his former employer is not a publicly traded company. The Department of Labor agreed that he was entitled to that protection because the company sold most of its loans on the secondary market, where they were pooled as asset-backed or mortgage-backed securities. Thus, the company had reporting obligations under the Securities and Exchange Act of 1934 and, in turn, was subject to suit under Sarbox.
But McCloskey isn't seeking reinstatement. He wants to change the sub-prime mortgage industry.
In a recent interview with IT Business Edge, McCloskey explained that the concept of "suitability" found in Sarbanes-Oxley "was transferred from the securities industry to the mortgage industry the very moment that Sarbox was signed into law in 2002." He says if Congress would recognize that fact, it wouldn't waste time on the "cockamamie schemes" it's devising to reduce the availability of sub-prime loans to those with bad credit.
So that's what he's focusing on. McCloskey testified before the Pennsylvania House Commerce Committee a month ago and has contacted Rep. Barney Frank's office with his research more than once.
"I certainly don't consider myself a lobbyist," he said, "but I do think it's important to get the information out there."