December 5, 2003

“Reporting Up” Acid Test: Mutual

SEC Commissioner Harvey Goldschmid gave a speech before the Investment Company Institute yesterday in which he warned that lawyers could be targeted if they were aware of credible evidence of a material violation of the securities laws and didn’t report it up. There have been no specific allegations against lawyers yet in the mutual fund scandals.

As reported in a NY Times article today, John Villa of Williams & Connolly is reported to state “because the questionable practices uncovered by the mutual fund investigations are not clearly illegal, they present exactly what lawyers feared would result from the SEC’s new rules.”

More on Tender Offers for Underwater Options

FYI, Corp Fin has issued a no-action letter to Martha Stewart Living Omnimedia in connection with its arrangement to provide liquidity to employees that hold underwater options.