26.26 - E. Duty To Report

JurisdictionNew York

E. Duty to Report

In the early 2000s, a number of corporate scandals led to scrutiny of the in-house structure, including the role of in-house attorneys in the scandals. Specifically, the in-house attorneys knew or should have known about the activities that led to fraud and other criminal activities. Yet for those attorneys who did know, they may have felt bound by the attorney-client privilege and did not report it to law enforcement or regulators.

Congress, in an attempt to address the fallout from the scandals and hopefully prevent future ones, passed the Sarbanes-Oxley Act of 2002.3803 Section 3073804 of the law required the SEC to promulgate rules of professional responsibility for attorneys who appear and practice before the SEC. The section required the SEC to issue rules:

(1) requiring an attorney [appearing and practicing before the SEC] to report evidence of a material violation of securities law or breach of fiduciary duty or similar violation by the company or any agent thereof, to the chief legal
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