In addition to or in lieu of broad-based tax-qualified retirement plans, employers often provide select executives or groups of executives with nonqualified deferred compensation arrangements. These "arrangements" may be in the form of a plan, a written agreement or even a clause in an employment agreement. Much like a "401(k)" tax-qualified retirement plan, these arrangements typically provide for an advance written election by the executive to defer the receipt of otherwise payable future compensation. However, unlike tax-qualified retirement plans, which by law must generally preclude the distribution of benefits prior to an event such as death, disability, retirement or separation from service with the employer maintaining the plan, many nonqualified deferred compensation arrangements have provided for far greater flexibility as to early access to plan funds. To date, the tax law has permitted nonqualified deferred compensation, along with the attendant deferral of tax revenues for the government, on the theory that it provided a tax-favored mechanism for the accumulation of additional savings for retirement. The implementation of nonqualified deferred compensation arrangements providing for distributions upon certain types of arguably foreseeable "hardships" (eg, to pay for college) or in return for a "haircut" forfeiture, cut against the notion that the revenue deferral effect on the government is outweighed by the benefit of permitting the accumulation of additional retirement funds, as these arrangements provide benefits which may not be used for purposes of retirement.
- November 29, 2004Dana Scott Fried
As many criminal practitioners are acutely aware, the Internal Revenue Service has recently ramped up compliance and enforcement efforts with budget increases and enhanced resources. A lesser-known component of this revitalized enforcement is the IRS Office of Professional Responsibility (OPR), which is charged with regulating professionals - mostly lawyers and accountants -- who practice before the IRS. OPR enforces ethical rules that govern practice before the Service, commonly known as "Circular 230," and may sanction practitioners who violate those rules. Because OPR matters can interact with the criminal process in many respects, conscientious white-collar practitioners and corporate tax counsel should familiarize themselves with OPR and its power over tax professionals.
November 29, 2004Scott D. Michel and Justin A. ThorntonBanishment from the public company world -- through the enforcement of a D&O bar - used to be an extreme remedy for management misconduct. Now, the trend has turned, with Sarbanes-Oxley (SOX) and the current enforcement climate leading to a flood of requests for bars. In 2000, the SEC asked federal courts to impose 38 D&O bars, 7.5% of the cases initiated that year. In 2001, the SEC asked for 51 D&O bars, or 10.5%. In 2002, in the wake of corporate scandals that gave rise to Sarbanes-Oxley, the SEC requested 126 D&O bars, in 21% of initiated actions. In 2003, that number shot up to 170, in 25% of cases. As Stephen Cutler, the head of the SEC's Enforcement Division, recently explained, the SEC is "aggressively" seeking D&O bars "in expanded ways." Practitioners are now finding D&O bars to be a routine component of settling an SEC action.
November 29, 2004Joseph F. Savage, Jr. and Christine Sgarlata ChungThe 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.
November 29, 2004James J. Graham and William J. HardyRecent rulings of importance to you and your practice.
November 29, 2004ALM Staff | Law Journal Newsletters |Court rulings from across the nation.
November 29, 2004ALM Staff | Law Journal Newsletters |Highlights of the latest product liability cases from around the country.
November 29, 2004ALM Staff | Law Journal Newsletters |In many product liability cases, as well as other tort actions, deposition testimony of treating physicians raises several issues. Are treating physicians experts or fact witnesses?
November 29, 2004Lawrence GoldhirschA visit to www.nlm.nih.gov (National Library of Medicine) provides a wealth of information on health-related topics. This column will review various sections of the Web site over the next few issues. If you click on Health Information, you can access MedlinePlus, which contains more than 600 health topics searchable in alphabetical order, a medical encyclopedia with images, drug information, including names of hospitals and doctors and the latest health news. There are links to ClinicalTrials.gov, which was reviewed in last month's Online column, as well as NIHSeniorHealth, Tox Town, Household Products Database, Genetics Home Reference, Medline/PubMed (Biomedical Journal Literature), Aidsinfo and Office of the Surgeon General.
November 29, 2004ALM Staff | Law Journal Newsletters |In the past, the implementation of a comprehensive document retention policy may have seemed a secondary concern at best; however, the primary importance to all companies of implementing such a policy was dramatically illustrated in 2002. That year brought the federal obstruction of justice conviction and ultimate demise of accounting firm Arthur Andersen for destruction of documents it knew were important to the SEC's investigation of the Enron scandal. It also brought the Sarbanes-Oxley Act of 2002, which significantly expanded the reach of federal obstruction statutes, increased the penalties for document destruction that hinders a federal investigation, and promulgated new record-keeping obligations. See, e.g. 18 U.S.C. 1519, 1520. Coupled with these developments are the ever-expanding obligations in connection with discovery of electronic information.
November 29, 2004Jennifer Smith Finnegan