SOX Whistleblowers Protection

PROTECTED ACTIVITY; CFO’S COMPLAINT OF INSUFFICIENT ACCESS TO AN OUTSIDE AUDITOR

In Welch v. Cardinal Bankshares Corp., ARB No. 05 064, ALJ No. 2003-SOX-15 (ARB May 31, 2007), the Complainant B who was the Respondent’s CFO complained that he had been denied sufficient access to an outside auditor, who instead chose to communicate with the company’s CEO. The ARB found that such complaints were not protected activity under SOX. The ARB wrote: “But Welch did not prove by a preponderance of evidence how his unhappiness about access to [theoutside auditor] constituted a reasonable belief that Cardinal was violating or might violate the enumerated fraud statutes, any SEC rule or regulation, or any federal law relating to fraud against shareholders. To be protected, an employee’s SOX complaint must definitively and specifically relate to the listed categories of fraud or securities violation.” USDOL/OALJ Reporter at 13 (footnote omitted).

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