DOL Review Board

Extends SOX to

Private Firm


Accounting Firm

Did Business with

Publicly Traded Corp. 

            Section 806 of Sarbanes-Oxley protects whistleblowers who are dismissed by publicly traded employers for raising concerns about securities trading irregularities or suspected fraud on shareholders. Individuals who file charges with OSHA under SOX can either pursue the case to an administrative hearing or can yank the file after 180 days and file in federal court.  Earlier this year the First Circuit Court of Appeals ruled that SOX whistleblower protections did not apply to privately held businesses that contract with public companies.  Lawson v. FMR LLC, 670 F3rd 61 (1st Cir. 2012).

             Disagreeing, the Administrative Review Board of the U.S. Department of Labor a few weeks ago held that an accountant, who was fired from a private auditing firm that provided audit and compliance services to a large public real estate firm, could maintain his retaliatory dismissal claim under SOX against his former employer.  Spinner v David Landau & Associates, LLC, ARB Case Nos. 10-111, 10-115 (May 31, 2012). 

            If your organization is privately held, but provides professional services to public companies, this decision gives a disgruntled employee of yours (or former disgruntled employee) a new, problematic reason to avoid court and instead opt for the DOL administrative adjudication route.  Until this conflict gets straightened out, assure that you have an internal process formally in place that takes complaints about your publicly traded customers seriously.