October 26, 2012

Court Finds PCAOB’s Inspection Privilege Extends to Companies Too

Troutman Sanders’ Brink Dickerson gives us this news: Recently, a court in the Western District of Missouri held that the PCAOB privilege applies – not only to material exchanged with the PCAOB and records of exchanges – but also to internal documents of the corporate client that reflect development of material and information for the PCAOB audit or investigation, because those materials were created because of the PCAOB action. The privilege may be asserted by the subject firm, as well as the PCAOB. This Bennett v. Sprint Nextel & KPMG decision is important because it is contrary to Silverman vs. Motorola, a 2010 Northern District of Illinois case that held that the privilege covered only documents and information prepared specifically for PCAOB.

Note that under ยง7215(b)(5)(B), without loss of the privilege, the material may be shared with other federal and state regulatory and enforcement entities.

Check out Francine McKenna’s interesting piece in Forbes entitled “Is The SEC’s Ponzi Crusade Enabling Companies To Cook The Books, Enron-Style?

Federal Court Applies SOX/Dodd-Frank Whistleblower Protections to Non-Securities Law Circumstances

In his blog, Mike Melbinger notes how a federal court recently allowed a whistleblower case under Sarbanes-Oxley and Dodd-Frank to proceed even though it related to an employee’s complaints about a qualified pension plan – not a securities law area.

More on “The Mentor Blog”

We continue to post new items daily on our blog – “The Mentor Blog” – for members. Members can sign up to get that blog pushed out to them via email whenever there is a new entry by simply inputting their email address on the left side of that blog. Here are some of the latest entries:

– Even Domestic Bribery Falls within the SEC’s Jurisdiction
– Delaware Allows $600 Million Caremark Claim To Proceed Against Allergan Directors
– Large Auditors Lobby Like Never Before
– Insider Trading: Three Thoughts about Rajat Gupta
– SEC Approves FINRA Rule Requiring Filing of Private Placements

– Broc Romanek