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
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.