February 24, 2006

The New European Union Whistleblower Law Guidelines

Recently, the Article 29 Working Party of the European Commission adopted a pan-European approach to Sarbanes-Oxley whistleblowing. It is similar to the French model, but with a broader reach – now U.S. companies operating throughout the EU will now have to comply in other countries beyond France and Germany.

In this podcast, Mark Schreiber of Edwards Angell Palmer & Dodge and Robert Bond of Faegre & Benson discuss these latest developments in the European Union. We have posted a copy of the EU Opinion in our “Whistleblowers” Practice Area.

Record Individual Auditor Penalties Levied by SEC in Xerox Enforcement Action

On Wednesday, the SEC settled an action, related to audits of Xerox, against four former and current KPMG partners, including a former leading partner in the accounting profession. Two auditors each agreed to pay a civil penalty of $150,000 and one agreed to pay $100,000 (and a sanction against a concurring or review partner). These are record payments from an auditor’s own pocket. According to this NY Times article, the SEC previously has obtained fines against seven individual auditors in four cases, none more than $85,000.

These fines are insignificant compared to the penalties already collected related to the Xerox audits. As you might recall, six former Xerox executives agreed in mid-2003 to pay more than $22 million – and Xerox agreed to pay $10 million in April 2002. However, the amounts in this new settlement are notable since they come from someone’s own pocketbook rather than “deep pockets.”

Fannie Mae Report: Over 2600 Pages!

Good grief! Not to be outdone by Richard Breeden’s tomes on WorldCom and Hollinger, the Fannie Mae report released yesterday by former U.S. Senator Warren Rudman and Paul Weiss totals nearly 700 pages – and over 2600 pages when you include the appendices. That’s a whole lot of billables! This 34-page executive summary is even barely manageable for someone with such a short attention span like me. [When I was a kid, I preferred the Classics Comics over the classics themselves. They were easier than Cliffnotes. Still have a few laying around.]

This article from the Washington Post today paints an interesting picture of the former Fannie Mae CFO going ballistic when the company’s audit committee chair had the nerve to call the Fannie Mae internal auditor in ’04 (ie. post-SOX). Sounds like a domineering CFO….