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CFO Whistleblower Reinstated by Court

CFO Whistleblower Reinstated by Court

by Rick Turoczy on February 24, 2005

A federal judge has reportedly ordered the reinstatement of David Welch, a former CFO of Cardinal Bankshares Corp. Welch was the first person to win whistleblower protection under the Sarbanes-Oxley Act after he raised accounting questions at the company and was fired last year.

Besides getting his job back at the small Floyd, Va.-based bank, Welch won nearly $65,000 in back pay and damages in the Feb. 15 ruling by U.S. Department of Labor Administrative Law Judge Stephen Purcell, according to the Associated Press.

For a law governing financial fraud, the Sarbox whistleblower provision, Section 806, is unusually strong in terms of protecting an employee’s job, notes Dan Westman, a partner at Shaw Pittman, a law firm. Indeed, the Sarbox mandate of immediate reinstatement for the whistleblower resembles industry-specific labor laws aimed at protecting workers in the mining and nuclear-power sectors. Westman told CFO.com that regulators in those industries have relied for decades on whistleblower information to provide what he dubs “undersight”—information arising from the workforce that can prevent life-threatening negligence or wrongdoing.

CFO Whistleblower Reinstated by Court

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