Article

Note: In 2001, Patricia Taylor (Employee), a commercial lending officer at Wells Fargo Bank of Texas (Employer), expressed a concern with Jonathan Homeyer (Supervisor) about backdating a LC for a certain client (Client) so that the "effective dates were different from the actual date of issuance."

Supervisor testified that on occasion he had "amended letters of credit for [Client]". He also testified that backdating is not a fraudulent activity if the beneficiary and issuer of the letter of credit have accepted the amended date. The opinion states that Supervisor had "contacted numerous individuals, including [Employer's] legal counsel and the head of compliance related to ... operational issues, to see if the practice was acceptable. They all approved the activity. From 2001 to July, 2003, [Employer] continued to amend [Client's] letters of credit and [Employee], as Relationship Manager of the account, was aware of the activity."

In February 2003, Employee was informed that Employer possessed only a copy of a loan document that required an original signature in the file. Employee asked a subordinate to trace over the copied signature to make it look like an original signature. Employee testified that she was not serious, but did not recall saying she was kidding. This statement was reported to Supervisor. At meeting to explain what happened, Employee admitted that this was not an appropriate comment to make. That same day, Employee lodged a harassment complaint against Supervisor. Subsequently, Employee was issued a final warning for violating Employer's code of ethics and business conduct, which she refused to sign. In March 2003, Employee received her performance evaluation, which she also refused to sign. Employee said she would take a copy home and respond point by point but failed to do so.

In July 2003, Employee began reviewing Client's file and found that Employer was continually backdating millions of dollars worth of letters of credit. "No financial institution that [Employee] has ever worked for has backdated letters of credit. On July 25, 2003, [Employee] contacted ... an attorney for [Employer], about the backdated letters ... [He] was upset to find out an e-mail he issued two years prior allowing [Supervisor] to backdate a letter of credit, was being used on a continuous basis as a legal opinion ... [Employee] sent a memo to [Supervisor] stating her concern over the backdated letters and [testified that Supervisor] told her to 'take the rap for the backdating incidents.' [Employer's counsel] issued a legal opinion memo stating that backdating letters can not involve meeting regulatory or internal requirements."

On 4 August 2003, Employee met with Supervisor to discus backdating and other issues. Supervisor testified that "[Employee] became defensive and very argumentative. After [Employee] had raised her voice, [Supervisor] left her office ... [Employee] followed [Supervisor] to his office where she began to question his role in undermining her creditability ... [Employee] ultimately began yelling and screaming." She was asked to leave Supervisor's office.

Employee was subsequently terminated on 8 August 2003.

Employee then filed a whistleblower complaint with the Occupational & Health Administration (OSHA), U.S. Department of Labor under the Sarbanes-Oxely Act claiming that she was being punished for reporting the backdating of LCs. When OSHA's regional director issued a determination that the complaint "lacked merit," Employee objected and filed this action with the Office of Administrative Law Judges, U.S. Department of Labor, claiming that Employer violated Section 806 of the Sarbanes-Oxley Act of 2002. The office of Administrative Law Judges, Price, ALJ, recommended to the Secretary of Labor that the complaint be denied.

The Sarbanes Oxley Act "affords protection from employment discrimination to employees of companies with a class of securities registered under Section 12 of the Security Exchange Act of 1934 (15 U.S.C. § 781) and companies required to file reports under Section 1(d) of the Securities Exchange of 1934 (15 U.S.C § 780(d)). Specifically, the law protects socalled 'whistleblower' employees from retaliatory or discriminatory actions by the employer, because the employee provided information to their employer or a federal agency or Congress relating to alleged violations of 18 U.S.C. § § 1341, 1343, 1344 or 1348, or any provisions of Federal law relating to fraud against shareholders."

In order to receive protection under the act, an employee must show "by a preponderance of the evidence that: (1) he engaged in protected activity under the Act; (2) his employer was aware of the protected activity; (3) he suffered an adverse employment action; and (4) circumstances are sufficient to raise an inference that the protected activity was likely a contributing factor in the unfavorable action."

The U.S. Department of Labor, Office of Administrative Law Judges, Price ALJ, ruled that Employee engaged in a protected activity when she notified Supervisor of the backdating. Although Employer claimed that the practice was not fraudulent, the judge noted that a "[c]omplainant does not need to show an actual violation of the law." Rather, she must reasonably believe that the activity is fraudulent.

However, the judge ruled that Employee failed to demonstrate circumstances sufficient to raise an inference that her protected activity was in any way a contributing factor in the decision to terminate her.

Rather, the judge held that "the weight of the evidence shows [Employee] was terminated because of her insubordinate actions on August 4, 2003, her unprofessional and combative behavior in the prior months, and her poor work performance. Therefore, [Employee] has not met her burden of proving by a preponderance of the evidence that her termination was due, at least in part, to her protected activity."

[JEB/rlf]

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