Securities Fraud and Sentencing Guidelines After Sarbanes-Oxley
In the legislative process that led to the adoption of Sarbanes-Oxley (SOX), legislators from both sides of the aisle vied with each other to establish their credentials for being tough on white-collar crime. The maximum penalties for mail fraud and wire fraud were increased from 5 to 20 years. Pub. L. No. 107-204 ' 903. The maximum penalty for willful violations of any provision of the Exchange Act or rule or regulation adopted thereunder the violation of which is unlawful was increased from 10 to 20 years. Pub. L. No. 107-204 ' 903. If this were not enough, a new crime relating to securities fraud in connection with the securities of public companies with a maximum penalty of 25 years was created. Pub. L. No. 107-204 ' 807 This does not exhaust the list, but should be sufficient to suggest that there are more than enough post-SOX criminal laws covering financial fraud to deter rational corporate officers and others to refrain from participating in financial crimes.
Federal Prosecutors Pressuring Companies
Encouraged by recent amendments to the Organizational Sentencing Guidelines, federal prosecutors are pressuring target companies to turn on their employees in ways that were unthinkable a few years ago ... Target companies have become active extensions of the government for purposes of coercing their employees into jeopardizing any opportunity they have to mount a successful defense against possible criminal charges.
Sarbanes-Oxley 'Creep'
The Sarbanes-Oxley Act (SOX) responded to well-publicized allegations of securities fraud. Its commandments about financial and internal control certifications, audit committees, auditor independence and the like expressly target publicly traded corporations. Yet much has been written about the "inevitable" spillover of SOX-type obligations onto not-for-profit organizations, especially in the health care sector. As a result, not-for-profit CEOs, compliance officers and counsel have practical questions.
The New SEC-FDA Alliance
On Feb. 5, 2004, the FDA and the SEC announced a new alliance between the two agencies. In a press release describing the changes, the FDA explained that "[u]nder the new referral procedure, any FDA employee who believes a publicly held, FDA-regulated firm has made a false or misleading statement to the investment public concerning a matter within the FDA's authority can initiate a process for referring the matter to the SEC Division of Enforcement."
First Sarbanes-Oxley Whistleblower Decision
In the first ruling applying the whistleblower protections of the Sarbanes-Oxley Act of 2002, 18 U.S.C. ' 1514A, an Administrative Law Judge (ALJ) ordered a bank holding company to rehire its former Chief Financial Officer (CFO), after finding that the company fired the CFO in retaliation for reporting alleged accounting misconduct to the company's Chief Executive Officer (CEO), outside auditors, and others.
Is Bribing Foreign Tax Collectors a Federal Crime?
Just when there appears to be a significant uptick in investigations for violations of the Foreign Corrupt Practices Act (FCPA), the Fifth Circuit has issued a decision that sows further confusion over the meaning of the FCPA's criminal prohibitions.
Does 'Cooperation' Obscure the Truth?
Nowadays more than ever, accusations of business crime must be put to the test, since the stakes in this post-Enron era are at an all-time high for an accused company's survival and its executives' personal liberty and reputation. The way we test allegations in Anglo-American law is through the adversary system. Yet, just when it's needed the most, the adversary system is increasingly sidelined. For the public company, adversarialism may no longer be an option at all.
