The gripping story of how an accountant took on Halliburton and won.

It’s the story of Tony Menendez, a Halliburton accountant who believed that the company was incorrectly recognizing revenue.  When the company wouldn’t correct its practices, he went to the SEC.  Halliburton learned of the complaint,  Menendez was ostracized, and the SEC investigation was dropped.  This kicked off a years-long battle in which Menendez sought protection under SOX as a whistleblower, ultimately culminating in a decision from the Fifth Circuit. 

What the article does not discuss, though, is the legal issue that dominated the case – namely, what legally qualifies as an adverse action for SOX purposes.  Halliburton executives disclosed Menendez’s identity to the rest of the accounting department, and his coworkers shunned him; thus, the critical question was, did disclosure of his identity, coupled with ostracism, constitute a materially adverse action?  See Halliburton, Inc. v. Administrative Review Bd., 771 F.3d 254 (5th Cir. 2014).  Notably, just last month, the Fifth Circuit – in a very closely divided decision – decided not to rehear the case en banc, over the lengthy dissent of Judge Jolly.  See Halliburton Co. v. Admin. Review Bd., United States DOL, 596 Fed. Appx. 340 (5th Cir. 2015)).

Anyway, the article presents a rather a riveting David-and-Goliath story that, among other things, highlights the risks inherent in the practice of government agencies relying on internal investigations when deciding whether to take an enforcement action.