LJN Newsletters

There is an industry-wide epidemic amongst mutual funds of both insider trading and market timing to the diminution of the ordinary stakeholder, including defined contribution plan account balances. Late trading is the clearly illegal practice of placing orders after the day's close at 4 p.m., and market timing is the disruptive (but not necessarily illegal) practice of trading quickly in-and-out of a fund.
This article is intended to assist plan fiduciaries (eg, law firms sponsors of pension plans and law firm clients) regarding how to behave in a fiduciarily appropriate manner.

The unauthorized practice of law (UPL) issue is the modern law firm's ultimate bottomless ethics pothole. In today's world, common sense would seem to dictate that a Maryland lawyer could close a complex commercial transaction for a Maryland client in foreign jurisdictions like Florida or New York. The fact that more than a few states would disagree with this proposition is what makes the UPL issue the bottomless pothole that it is.

Movement among major law firms and corporations.

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.

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.

Recent rulings you need to know.

Ever since the Supreme Court rendered its landmark decision in the case of Blakely v. Washington, lawyers and judges have been cast in the role of prognosticators, trying to predict how the courts -- most importantly the Supreme Court itself -- will apply Blakely to the Federal Sentencing Guidelines. We will soon know the answer, as the Supreme Court has agreed to hear arguments on Oct. 4, 2004, after expedited briefing. Until then, however, lawyers must prognosticate -- at the risk of guessing wrong.

Cooperation with government investigators has long been important for companies under the specter of an investigation. Under current agency policies and practices of the Securities and Exchange Commission (SEC) and U.S. Department of Justice (DOJ), and relevant provisions of the Sentencing Guidelines for Organizational Offenders, a "cooperative" corporation can realize substantial reductions in penalties or even avoid an enforcement action altogether. Seaboard Corporation in 2001 and HomeStore, Inc. in 2002 are excellent examples -- both were able to avoid SEC enforcement actions because of the extent and nature of their cooperation with investigators. The multi-million dollar question is what will be defined as "cooperation."