tennessee commerce Bank Ordered to Reinstate Chief Financial Officer
Edward M. Yarbrough, United States Attorney for the Middle District of Tennessee, announced that yesterday afternoon the United States District Court entered a temporary restraining order and preliminary injunction ordering Tennessee Commerce Bancorp, Inc. and Tennessee Commerce Bank to “immediately reinstate Complainant George Fort to his former position as Chief Financial Office with Tennessee Commerce Bank.”
George Fort, the Chief Financial Officer of Tennessee Commerce Bank in 2008, filed a complaint with the Occupational Safety and Health Administration (OSHA) alleging that the bank had terminated his employment in violation of the whistle-blower protection provisions of the Act, in retaliation for raising numerous concerns relating to internal controls, insider trading, and other related matters. Following an investigation, on March 17, 2010, the Secretary of Labor, acting through the Regional Administrator for OSHA, Region IV, issued her findings and a preliminary order. The Secretary found that Mr. Fort had engaged in numerous protected activities regarding possible violations of statutes enumerated by the Act by bank officers, including possible insider trading, wire transfers, internal controls, and check kiting, among other things. The Secretary further found that the bank was aware of Mr. Fort’s protected activity, and that he was subjected to adverse action when he was placed on administrative leave and subsequently terminated. The Secretary found “a strong inference of retaliation” in the bank’s actions, and ordered the bank to reinstate him, finding that “[a] preponderance of the evidence indicates that [Mr. Fort’s] protected activity was a contributing factor in the adverse actions taken against him. Accordingly, OSHA finds that there is reasonable cause to believe that Tennessee Commerce Bank violated” the Act.
The bank, however, refused to comply with the order to reinstate Mr. Fort, and on May 17, 2010, the Secretary filed a lawsuit seeking to compel the bank to comply with the order as required by the Sarbanes-Oxley Act.
Section 806 of the Sarbanes-Oxley Act was enacted to protect investors by ensuring corporate responsibility, enhancing public disclosure, and improving the quality and transparency of financial reporting and auditing. The whistle-blower provisions were intended to protect employees who report fraudulent activity that can mislead investors in publicly traded companies. In issuing the injunction, Judge Haynes determined “that the Secretary has made a showing of a likelihood of success given her extensive factual findings. Fort would suffer irreparable injury” if the court did not grant the injunction. Judge Haynes concluded, therefore, that the “public interest is served by enforcement of this Congressional mandate” to protect whistle-blowers.
The bank filed a motion to stay enforcement of the preliminary injunction pending an appeal to the Sixth Circuit. Judge Haynes heard argument on the bank’s motion this afternoon and denied it, writing: “Finally, the Defendants’ motion for a stay is essentially an effort to ignore a clear Congressional mandate sought to be enforced by the Secretary.”
Congress passed the whistle-blower protection provisions of the Sarbanes-Oxley Act in the wake of the Enron and WorldCom scandals so that employees with the courage to report suspected illegal conduct could do so without fear of reprisal.
The Secretary of Labor is represented in this lawsuit by Assistant United States Attorney Mark H. Wildasin.
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