Dealing with the SEC's 'Up-the-Ladder' Reporting Requirements
January 26, 2005
The provision of Sarbanes-Oxley (SOX) that sets out the gatekeeper role for lawyers, Section 307, requires that lawyers report "up the ladder" (that is, to senior management and, ultimately, to the audit committee or the full board of directors) evidence of certain violations of the securities laws and breaches of fiduciary duties. While the SEC's rules implementing Section 307 became effective in August 2003, there remains much ambiguity in how the SEC plans to enforce them.
SOX: Measuring the Costs and Searching for Tangible Benefits
January 26, 2005
After spending millions in 2004 to comply with the first phase of Sarbanes-Oxley (SOX), compliance officers and financial executives should evaluate their return on compliance. While the tangible benefits may be difficult to value today, most financial executives (57%) describe their company's SOX compliance as a good investment for stockholders, and 70% say they have stronger internal controls after complying with the law, according to the 2004 Oversight Systems Financial Executive Report On Sarbanes-Oxley Compliance.
New Steps for an Effective Company Compliance Program
January 26, 2005
U.S. Sentencing Commission statistics indicate that companies charged with federal crimes have been doing an awful job of creating effective programs to detect and deter employees' criminal acts. According to the Commission, of the more than 850 companies convicted of crimes from 1995 through 2002, only two had a compliance program that a federal judge recognized as effective. In one respect, this is not surprising, as federal prosecutors routinely argue that if a company had an effective compliance program, the company wouldn't have committed the crime in the first place, and the court wouldn't be spending its time in a sentencing hearing.
In The Courts
January 26, 2005
Recent rulings of importance to you and your practice.
Supreme Court's Sentencing Guidelines Decision
January 26, 2005
On Jan. 12, the Supreme Court, in <i>United States v. Booker</i>, found portions of the Federal Sentencing Guidelines unconstitutional. For the last few years, corporate officers and directors have been forced to take a personal interest in criminal justice and in the Sentencing Guidelines. This has been especially true after the United States Sentencing Commission raised the guideline's penalties for white-collar crime in response to the Sarbanes Oxley Act of 2002.
Identity Theft: The Next Corporate Liability Wave?
January 26, 2005
The FTC estimates that over 24 million people in the United States have had their identity stolen. Using the $11,000 damage figure per case developed above, that represents over $26 billion of potential liability if fault can be ascribed to the data holder. Customer and employee databases are prime targets for identity thieves because a single vulnerability in a company's information security can yield access to personal data on thousands of persons. In addition to the growing threat of class-action lawsuits, new laws are coming into effect to hold organizations responsible for securing personal data. Companies should evaluate this risk and consider taking action to reduce their potential liability.
State Enforcement: An Interview with Eliot Spitzer
January 26, 2005
The corporate scandals of the past several years have shaken the investing public. In response, state attorneys general like New York's Eliot Spitzer have shown what state regulators can accomplish with an ambitious agenda, talented personnel, and the right statutory tools. With Attorney General Spitzer leading the charge, state attorneys general have played an increasingly active role in matters traditionally handled without state intrusion by the SEC and other federal regulators. This increased state activism has not been free of controversy. In a recent interview, we asked Spitzer about the causes and consequences of that activism and what the future holds. His answers, and the recent activities of his counterparts in other states, confirm that state attorneys general are in no hurry to return to the status quo ante. Like it or not, the states are here to stay.
Practice Tip: Want To Blog?
January 26, 2005
Google describes a Blog as: "a journal that is made available on the Web. The activity of updating this blog is known as blogging and, likewise someone who keeps a blog is known as a blogger!" Typically, blogs are updated daily by the use of software that allows people with little or no technical background to maintain the blog; however, while attorneys are the best at what they do ' <i>ie</i>, the practice of law ' they have no clue when it comes to marketing skills for their firm, or technology and how to effectively design a blog! <br>Well, recently all this has changed ' and for the better, I might add.
