The weblog Deal Attorney notes that the SEC is increasingly targeting general counsel in certain enforcement proceedings. It points to a detailed report from the Fried Frank law firm that highlights a recent matter involving Google and its general counsel. A consent order has settled this dispute, without any admission of liability.
Legal Director also covers this story (30 day link). The article quotes SEC head of enforcement Stephen Cutler, who has noted that lawyers have been named in more than 30 of the SECâ€™s enforcement actions in the previous two years. This resulted from the SECâ€™s policy of focusing its limited resources on policing â€˜gatekeepersâ€™ to the capital markets, defined as:
“the auditors who sign off on companiesâ€™ financial data; the lawyers who advise companies on disclosure standards and other securities law requirements; the analysts who warn investors away from unsound companies; and the boards of directors responsible for oversight of company management”.
The Fried Frank report concludes somewhat ominously:
the Commissionâ€™s recent efforts confirm that securities lawyers, like accountants, will be held rigorously to high standards of conduct. Securities lawyers occupy a sensitive point in the regulatory process. By increasing its pressure on them, the Commission continues to reinforce the messages of its regulatory agenda and to leverage its enforcement capabilities.
Check your D&O policy and bylaws on indemnification…