Sarbanes-Oxley forces company to re-hire FD
The US Sarbanes-Oxley Act has netted its first company, ordering a small-town Virginia bank holding firm Cardinal Bankshares, to hire back its chief financial officer.
Link: Sarbanes-Oxley begins to bite
It sacked David Welch after he raised concerns over the company’s alleged practices of insider trading, faulty internal controls and financial reporting irregularities.
His lawyers pleaded, using Sarbanes-Oxley’s whistle-blower protections, in what is believed is the first case where the law – enacted two years ago to clean up public company accounting – has been used successfully.
Welch was sacked after bringing a lawyer into a company-led investigation of his concerns. The judge agreed with Welch that the company wanted him sacked and used an alleged ‘non-compliance’ in an internal audit (he insisted on legal representation) as a pretext for the dismissal.
Aside from ordering the company to rehire Welch, he ordered it to provide him with back pay and to cover his legal fees. He has yet to rule on damages.
