Bank of America faces Sarbanes-Oxley Violations — Ordered to Pay Nearly $1 Million

While we won’t say we told you so, the government has announced a slew of Sarbanes-Oxley violations since we wrote about board of director duties on our Massachusetts Employment Lawyer Blog.

The Sarbanes-Oxley Act of 2002 requires companies and boards of directors to obey financial regulations meant to avoid corporate collapses such as Enron and WorldCom. One thing we didn’t mention was whistleblower protections — which is where the government landed with both feet this month on a number of companies. 182576_whistle.jpg

  • The U.S. Department of Labor found Bond Laboratories Inc. and its former CEO in violation of whistleblower protection provisions. The company has been ordered to rehire the employee and pay about $500,000 in back wages, interest and other damages. The company was accused of firing the officer after he objected to sales figures that misrepresented the company’s value to potential investors.

The company has 30 days to appeal the decision which was issued Sept. 15 by the Occupations Safety and Health Administration.

OSHA enforces the whistleblower portion of the Sarbanes-Oxley Act as well as 20 other laws protecting employees who report violations of laws regulating airlines, consumer products, financial reforms, health care reforms, nuclear energy, commercial motor carriers, environmental, railroad and maritime laws.

Employees who report corporate wrongdoing — whether it’s fleecing the government or unfair labor practices — are generally protected from employer retaliation. Though it can often take a Massachusetts employment law attorney to assert your rights. In many cases, back wages and other damages are available to employees who prove they were wrongly terminated.

  • On Sept. 14, the government ordered Bank of America to pay $930,000 in back wages, damages and interest to an employee fired for reporting suspected Sarbanes-Oxley violations. The employee had worked for Countrywide Financial Corp., which was purchased by B of A. The employee headed internal reviews that found widespread mail and bank fraud by Countrywide employees. The employee said those trying to report the fraud to the company’s employee relations department were frequently retaliated against. Ultimately, the employee was fired shortly after the merger. “It’s essential that American’s workers do not have to fear retaliation when reporting wrongdoing,” said OSHA’s Dr. David Michaels.

For those serving as a corporate board member, these cases illustrate the need to ensure compliance with the law. Sarbanes-Oxley also allows for the personal liability of board members in some situations. The whistleblower statute makes it that much more likely that the government will ultimately find out.

As an employee, you need to understand your rights. In many cases, you are protected from retaliation when reporting a dangerous or illegal condition. However, consulting an experienced Boston employment lawyer is your best bet when it comes to ensuring that those rights are protected.

A Boston corporate law firm, The Brown Law Firm, LLC, has offices in Belmont and Boston. For a free and confidential consultation, call 617-489-0817 or contact us through this website.

Additional Resources:

Sarbanes-Oxley Establishes Responsibilities of Corporate Boards in Massachusetts
, Massachusetts Employment Lawyer Blog, Aug. 29, 2011.

Legal Advice Critical for Massachusetts Boards-of-Directors Facing Complex Issues, Massachusetts Employment lawyer Blog, Aug. 23, 2011.

MBA
Boston Bar Assosiation