The announcement on January 21 that Gemstar’s former General Counsel, Jonathan Orlick, will pay a fine of $306,000 and be barred from being a director or officer of a public company for 10 years is just the latest in a growing trend of SEC Enforcement actions that end with general counsels agreeing to fines and disgorgements.
In September 2004, Electro Scientific Industries, Inc.’s former General Counsel, John E. Isselmann, Jr., agreed to pay $50,000 to settle the SEC action against him. And in May 2004, former General Counsel for Warnaco, Stanley Silverstein, agreed to pay $165,000 to settle the SEC action against him.
As we blogged on January 14, SEC Enforcement Director Stephen Cutler addressed the increased interest in lawyers in a September 2004 speech by referring to the Enforcement Division’s “access theory” from the 1970s: if you ensure good behavior by those who control “access” to the capital markets, then you can achieve more than you would by going after every bad actor. At that time, Cutler noted that the Staff had named lawyers as respondents or defendants in more than 30 of the enforcement actions in the past two years, which were evenly split between in-house and outside counsel.
Cutler confirmed the Staff’s continuing interest in the behavior of lawyers in a December 2004 speech by noting that the Staff is looking for intentional, knowing misconduct on the part of lawyers. Additionally, he said that the Staff was “also looking hard at situations in which lawyer misconduct meets statutory scienter requirements that are short of actual knowledge.”
Director Compensation Info
Be sure to check out our most recent “Inside Track with Broc” – an interview with Paul Hodgson, Senior Research Associate of The Corporate Library. The interview provides helpful information on The Corporate Library’s Director Compensation Database.
Posted by Julie Hoffman