Opinion ID: 1315738
Heading Depth: 2
Heading Rank: 1

Heading: Guyden's Relationship with Aetna[1]

Text: In January 2004, Guyden joined Aetna as its Director of Internal Audit. Soon after starting, Guyden alleges that she discovered that Aetna's Internal Audit Department was ineffective, demoralized, and without independence or objectivity. According to Guyden's complaint, these problems were so serious that she believed that Aetna was in danger of violating the Sarbanes-Oxley Act of 2002, Pub.L. No. 107-204, 116 Stat. 745 (2002) (SOX). SOX, and regulations promulgated thereunder, require corporate officers to report on the effectiveness of internal controls over financial reporting, and they prohibit those officers from characterizing the controls as effective if there are one or more material weaknesses.... 17 C.F.R. § 229.308(a)(3). Guyden claims that she reasonably believed that Aetna was at risk of violating this regulation because (1) the Internal Audit Department was ineffective, and (2) that ineffectiveness, if left unaddressed, would become a material weakness in the company's internal controls. Guyden responded by attempting to rehabilitate the Internal Audit Department. In need of more resources and greater authority to make changes within the Department, she also brought her concerns to the attention of senior management. During the course of her discussions with senior management about those concerns, Guyden and management clashed over a number of issues, including the possibility of an outside audit and Guyden's efforts to restructure her Department. Over the spring of 2004, Guyden sought assistance from Aetna's Chief Financial Officer, Alan Bennett. Guyden found Bennett's response wanting, and on August 16, 2004, she raised her concerns to Chairman and Chief Executive Officer John (Jack) Rowe, President Ron Williams, and General Counsel Lou Briskman. About one week after this meeting, Bennett gave Guyden a withering performance review, despite having given her a positive review one month earlier. Guyden eventually prevailed in hiring an outside auditor to review Aetna's internal controls. According to the complaint, senior management prevented the distribution of the outside auditor's report until September 30, 2004, one week after the Audit Committee had held its scheduled meeting. That Committee's next scheduled meeting was to take place on December 2, 2004. Guyden planned to discuss her concerns with the Committee at that meeting, where she also hoped to present the outside auditor's report. Ten days before the meeting, however, Aetna terminated Guyden's employment. After being terminated, Guyden requested to speak at the Audit Committee meeting about her concerns. Senior management denied that request. Guyden believes that Aetna fired her to prevent her from bringing attention to deficiencies in Aetna's internal controls, and she points to management's refusal to allow her to speak at the Committee meeting as evidence of its desire to prevent further discussion of her concerns.