SEC Proposes Federal Preemption of Rules of Conduct for Attorneys Practicing Before the Commission

February 01, 2003

The Sarbanes-Oxley Act  was passed by Congress and signed into law by President Bush in July 2002 in response to several corporate financial and disclosure scandals.  Section 307 of the Act directs the SEC to “issue rules, in the public interest and for the protection of investors, setting forth minimum standards of professional conduct for attorneys appearing and practicing before the Commission.”   Specifically, Section 307 directs the SEC to adopt a rule “requiring an attorney 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,” up the ladder within the company, first to the chief legal officer or the chief executive officer and then to the board of directors or a committee of the board.

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