Sarbanes-Oxley Section 307/205 – law departments neglect notification of compliance obligation

Guest blogger Jeff Kaplan writes that “SEC Rules of Part 205 – based on Section 307 of Sarbanes-Oxley – requires attorneys practicing before the SEC to take certain actions if faced with evidence of a securities law violation. When first enacted, the SEC standards caused many law departments to issue policies for both their in-house and outside attorneys and to undertake various related measures (including training and establishing compliance committees).

But are law departments still concerned enough about these standards to take even minimal steps to promote compliance with them?

At a PLI compliance institute this week, I asked the audience: If you are in a law department, do you regularly send your [Sarbanes Oxley 307/205] policy to newly retained law firms? Of twenty responses received, nineteen were No. An article in the Georgetown Journal of Legal Ethics, Sonne, “Sarbanes-Oxley Section 307: A Progress Report on How Law Firms and Corporate Legal Departments Are Implementing SEC Attorney Conduct Rules,” (Summer 2010), similarly indicated a lack of attention to the rule by law departments.

The SEC – in the face of a violation – would likely have little sympathy for companies whose law department failed to take reasonable steps to promote compliance with the rule (which sending out a copy of their policy would surely seem to be). As was famously said in Death of a Salesman, ‘Attention must be paid…’”

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