August 13, 2003

The SEC posted 35 FAQs

The SEC posted 35 FAQs about auditor independence today.

Yesterday, the ABA’s House of Delegates voted to approve changes to its model code of conduct – 239 to 147 – to allow lawyers to disclose client confidences to protect a company from harm caused by an employee’s crime. This “reporting out” could go either to a regulator or another party, such as shareholders or creditors.

Now, the SEC will deliberate on whether to proceed with its own “reporting out” proposal. Lucky Item 13 of Form 8-K here we come?

We are hearing that a few companies provide outside counsel with a role as part of their “reporting up” policies (such as providing that if an attorney is not sure she is covered, she can call them to make the determination or to provide guidance on whether a matter is material). This is likely to be done by smaller companies that have limited securities expertise on its staff.

Tune into today’s webcast regarding “Designing Reporting-Up and Complaint Procedures” for more on these topics.