You need a _and_quot;qualified legal compliance committee_and_quot; 1232

  • Yes, there are a lot of committees… but this is an important one.
    Do you remember Section 307 of the Act? It is the section that turns lawyers into whistleblowers…
    Section 307 of the Sarbanes-Oxley Act requires the Commission to issue rules setting forth minimum standards of professional conduct for attorneys appearing and practicing before it. - SEC Adopts Attorney Conduct Rule Under Sarbanes-Oxley Act:
    'January 23, 2003 The Securities and Exchange Commission today adopted final rules to implement Section 307 of the Sarbanes-Oxley Act by setting ‘standards of professional conduct for attorneys appearing and practicing before the Commission in any way in the representation of issuers.’
    On Nov. 6, 2002, the Commission voted to propose the standards of professional conduct in a new Part 205 of 17 CFR. That proposal defined who is appearing and practicing before the Commission in the representation of an issuer. Attorneys were required to report evidence of a material violation ‘up-the-ladder’ within an issuer. In addition, under certain circumstances, these provisions permitted or required attorneys to effect a so-called ‘noisy withdrawal’ – that is, to withdraw from representing an issuer and notify the Commission that they have withdrawn for professional reasons.
    The Commission voted to extend for 60 days the comment period on the ‘noisy withdrawal’
    The Commission voted to propose an alternative to ‘noisy withdrawal’ that would require attorney withdrawal, but would require an issuer, rather than an attorney, to publicly disclose the attorney’s withdrawal or written notice that the attorney did not receive an appropriate response to a report of a material violation.
    Specifically, an issuer that has received notice of an attorney’s withdrawal would be required to report the notice and the circumstances related thereto on form 8-K, 20-F or 40-F, as applicable, within two days of receiving the attorney’s notice.
    'The rules adopted by the Commission today will:
    :.: require an attorney to report evidence of a material violation, determined according to an objective standard, ‘up-the-ladder’ within the issuer to the chief legal counsel or the chief executive officer (.) of the company or the equivalent;

    :.: require an attorney, if the chief legal counsel or the chief executive officer of the company does not respond appropriately to the evidence, to report the evidence to the audit committee, another committee of independent directors, or the full board of directors;

    :.: clarify that the rules cover attorneys providing legal services to an issuer who have an attorney-client relationship with the issuer, and who have notice that documents they are preparing or assisting in preparing will be filed with or submitted to the Commission;

    :.: provide that foreign attorneys who are not admitted in the United States, and who do not advise clients regarding U.S. law, would not be covered by the rule, while foreign attorneys who provide legal advice regarding U.S. law would be covered to the extent they are appearing and practicing before the Commission, unless they provide such advice in consultation with U.S. counsel;

    :.: :.: allow an issuer to establish a ‘qualified legal compliance committee’ (QLCC) as an alternative procedure for reporting evidence of a material violation. Such a QLCC would consist of at least one member of the issuer’s audit committee, or an equivalent committee of independent directors, and two or more independent board members, and would have the responsibility, among other things, to recommend that an issuer implement an appropriate response to evidence of a material violation. One way in which an attorney could satisfy the rule’s reporting obligation is by reporting evidence of a material violation to a QLCC;

    :.: allow an attorney, without the consent of an issuer client, to reveal confidential information related to his or her representation to the extent the attorney reasonably believes necessary (1) to prevent the issuer from committing a material violation likely to cause substantial financial injury to the financial interests or property of the issuer or investors; (2) to prevent the issuer from committing an illegal act; or (3) to rectify the consequences of a material violation or illegal act in which the attorney’s services have been used;

    :.: state that the rules govern in the event the rules conflict with state law, but will not preempt the ability of a state to impose more rigorous obligations on attorneys that are not inconsistent with the rules; and

    :.: affirmatively state that the rules do not create a private cause of action and that authority to enforce compliance with the rules is vested exclusively with the Commission.
    I like the language of lawyers… noisy withdrawal This means a lawyer must quit working for the company and must report to the SEC that he did so for professional reasons.
    Of course, he didn’t disclose something violating the attorney-client proviledge, did he???

    Imagine… You are a CEO… You did something ‘creative’ and you discuss it with your lawyer… But, attorney-client privilege is not all it once was… Now your attorney has to quit - sorry, it is just a noisy withdrawal. Yes, you will have a SEC investigation…
    But don’t worry… you can tell everything to your lawyer and he will help you :lol: :lol: :lol:

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