PCAOB Proves It Has Teeth
November 29, 2004
While some companies are unfamiliar with the Public Company Accounting Oversight Board (PCAOB), it has recently been making its presence known. PCAOB is a private-sector nonprofit corporation created by the Sarbanes-Oxley Act of 2002 (SOX), whose stated purpose is to "oversee the audit of public companies that are subject to the securities laws, and related matters, in order to protect the interests of investors ... " Section 101(a). Although some questioned whether PCAOB would ultimately have any real-world impact on accounting firms and the public issuers they audit, PCAOB has proven that it has the authority, ability and appetite to shape the heightened environment in which companies now operate following passage of SOX and its focus on restoring investor confidence in companies' financial reporting.
The IRS Office of Professional Responsibility
November 29, 2004
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.
SOX Lowers the Bar for Barring Directors and Officers
November 29, 2004
Banishment 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.
Should You Tell Employees How Their Company Can Get Immunity From Prosecution?
November 29, 2004
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.
In The Courts
November 29, 2004
Recent rulings of importance to you and your practice.
Online
November 29, 2004
A visit to <i>www.nlm.nih.gov</i> (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.
Ten Steps to an Effective Document Retention Program
November 29, 2004
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. <i>See, e.g.</i> 18 U.S.C. 1519, 1520. Coupled with these developments are the ever-expanding obligations in connection with discovery of electronic information.
Case Notes
November 29, 2004
Highlights of the latest product liability cases from around the country.
