Last month, the U.S. Department of Labor’s Administrative Review Board (ARB) rendered a decision upholding an Administrative Law Judge’s pro-whistleblower decision under the Sabanes- Oxley Act (often referred to as SOX these days).
The ALJ in Kalkunte v. DVI Financial Services, Inc., a case decided in 2005, held that a privately-held company acting as a contractor, subcontractor, or agent of a publicly traded company can be held liable for violation of the whistleblower provisions of the Sarbanes-Oxley Act. The private company, AP Services, was acting as a “turnaround specialist” for Kalkunte’s employer DVI, a publicly traded company, which declared bankruptcy while all of this was going on.
The complainant, Sheila Kalkunte, who was corporate counsel for the public company, alleged that she was retaliated against for disclosing information to audit committee members and outside counsel about senior management’s alleged misrepresentation of statistical data in violation of securities laws. She was let go after a meeting with the private company’s people about her SEC allegations against their clients, supposedly as a part of the company’s “restructuring.” She had already survived a previous AP restructuring.
Kalkunte alleged that the “restructuring” was actually a retaliatory discharge.
The company argued that privately- held companies do not fall under SOX. Neither the ALJ nor, subsequently, the ARB bought that argument. AP, while privately- held, was working for a public company, and so fell under SOX as an agent of DVI.
The ALJ, affirmed by the ARB, found that there was substantial evidence to support a finding of retaliation, and awarded lost wages and compensatory damages.
If you are in the Atlanta area, and think that you have been wrongly treated by your employer, contact an employment attorney today.