Department of Labor Issues Landmark Decision in Favor of Sarbanes-Oxley
Whistleblowers
WASHINGTON, March 3 /PRNewswire/ -- On February 27, 2009, the United States
Department of Labor's Administrative Review Board ("ARB") affirmed the
Administrative Law Judge's ("ALJ") opinion in Kalkunte v. DVI Financial
Services, Inc., where the ALJ 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
("SOX"). SOX, also known as the Corporate and Criminal Fraud Accountability
Act of 2002, was enacted to ensure that employees who report corporate fraud
can do so without fear of employer retaliation. The Kalkunte decision is
significant because it defines the scope of liability under SOX and because it
is the first time that the ARB has affirmed an ALJ decision in favor of a SOX
plaintiff.
In Kalkunte the complainant Sheila Kalkunte, a former Associate General
Counsel of DVI Financial Services, Inc. ("DVI"), 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. In addition, Kalkunte
alleged that DVI, a publicly traded company and AP Services, LLC ("AP"), a
privately-held company were both liable for retaliation under Section 806 of
SOX. In its defense, AP argued that privately-held companies are not required
to adhere to SOX.
In affirming the ALJ's decision, the ARB held that a company cannot escape
liability for violating the whistleblower provisions of SOX merely because it
is not registered under the Securities and Exchange Act or required to file
reports under the same act.
The ARB awarded Kalkunte lost wages and compensatory damages based on its
finding that there was substantial evidence supporting the ALJ's ruling that
both DVI and AP retaliated against Kalkunte because of her whistleblowing
activity.
R. Scott Oswald and Nicholas Woodfield, Principals at The Employment Law
Group(R) law firm (www.employmentlawgroup.com), represented Ms. Kalkunte and
can be reached at 202-331-2883.
SOURCE The Employment Law Group P.C.
R. Scott Oswald or Nicholas Woodfield, The Employment Law Group,
+1-202-331-2883
