Should You Tell Employees How Their Company Can Get Immunity From Prosecution?
The landscape has changed for many senior executives and other employees of corporations subject to government investigation. Two recent cases show how prosecutors virtually forced companies to "turn in" suspect executives and other employees to avoid prosecution. Amendments to the Sentencing Guidelines, effective Nov. 1, 2004, incorporate this change in the way courts will assess a corporation's compliance program.
Disclosing Client Confidences - An Update
In the February 2003 edition of this Bulletin, I commented on the then recently issued "final" Sarbanes-Oxley (SOX) Rules on Standards of Professional Conduct for Attorneys. The "final" rules were not in fact final, because the SEC both had sought additional comments on the rules and had proposed, and sought comments on, a modified form of its controversial proposed "noisy withdrawal" rules. Since then, there has been no further word from the SEC about when and how a lawyer for a company or business executive is required or permitted to report client misconduct to a third party, including regulators and law enforcement authorities. But that does not mean all has been quiet. Significant changes have been made by the ABA to the Model Rules of Professional Conduct in this area and by international organizations wrestling with the role of lawyers in anti-money laundering compliance efforts.
Document Destruction Horror Stories
Three recent cases involving government inquiries provide sobering lessons about electronic evidence to corporations and their lawyers. The most notorious, <i>U.S. v. Arthur Andersen, LLP</i>, resulted in criminal convictions. Another, <i>In the Matter of Banc of America Securities LLC</i>, involved SEC enforcement action. The third, <i>United States v. Philip Morris</i>, arose in a Department of Justice civil suit. If nothing else, the cases demonstrate that corporations exposed to such investigations must implement effective and well-maintained information management systems.
In The Courts
Recent rulings of importance to you and your practice.
Jury Selection and Media Access
For laypersons and lawyers alike, the trial of Martha Stewart last winter was irresistible legal theater. But if, between all the discussions of Ms. Stewart's courtroom attire and lunchtime dining habits, you missed seeing how the district court and Second Circuit wrestled with the issue of media access to jury selection, you may want to give <i>ABC, Inc. v. Stewart</i>, 360 F.3d 90 (2d Cir. 2004) a read.
Special Issue: Securities Enforcement Actions After SOX
The Securities and Exchange Commission (SEC) was created by Congress in the aftermath of the 1929 stock market crash, the cause of which was widely attributed to fraudulent and deceptive practices on Wall Street. It is an independent regulatory agency whose five commissioners, including a Chairman, are appointed by the President. The SEC's Division of Enforcement is the "police force" of the Commission; it is responsible for the civil and administrative enforcement of the various federal securities laws. The Enforcement Division also typically works closely with U.S. Attorney's Offices throughout the country to assist with the criminal prosecution of securities violations.
Introduction
Special Issue: As we all know, as a result of widespread accounting scandals in 2001-02, Congress passed the Sarbanes-Oxley Act of 2002, Pub. L. No. 107-204, 116 Stat. 769 (2002) (SOX). SOX, signed into law on July 30, 2002, authorizes substantially increased funding for the United States Securities and Exchange Commission, creates broad new SEC enforcement powers, a greater range and magnitude of civil and criminal penalties, several new criminal prohibitions and more rigorous reporting requirements among other things.
