Former Execs File Lawsuits Over Accounting Disputes

During the past week, two more companies found themselves facing lawsuits from former executives for wrongful discharge after incidents involving ethics and financial reporting. Attorneys say it is a growing area of litigation.

The lawsuits were filed against Solectron and Ovitz's Artists Management Group. Solectron was sued by a former vice president who said his employment was terminated for suggesting the firm should have written down $ 45 million in obsolete inventory. The Ovitz Group was sued by a former executive, who said she was fired for telling auditors the Group was misusing $ 4 million in annual funds from partner Vivendi.

Solectron and the Ovitz Group join a growing number of companies facing similar lawsuits. These companies include Xerox, WorldCom, Global Crossing and Dynegy. The former controller of Dynegy sued the Houston energy firm in August, saying he was dismissed because he would not manipulate natural-gas trading data and earnings.

Attorneys attribute the increase in this type of litigation to a growing sense of dissatisfaction with declining corporate ethics, along with encouragement recently provided from the Sarbanes-Oxley Act. The Act, which was passed in July, requires companies to set up confidential procedures for employees who suspect fraud, and it allows workers to sue if they are harassed, demoted or fired for reporting allegations. "This gives employees a decent weapon," says Jonathan Ben-Asher, an attorney at the law firm of Beranbaum Menken Ben-Asher & Fishel in New York. "We're going to see many more of these cases."

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