SEC Enforcement Director: Gatekeepers and the Virtue of “Professional Courage”

At the 27th Annual Ray Garrett, Jr. Corporate and Securities Law Institute of 2007, Linda C. Thomsen, Director of the SEC Division of Enforcement, gave a keynote speech that addressed several important issues to corporate law departments and the office of general counsel.

Director Thomsen’s remarks include an extensive discussion of the SEC’s principles-based approach for gauging cooperation in corporate investigations. Her speech emphasizes the agency’s respect for the attorney-client relationship and says the SEC will remain judicious with circumstances in which it would ask for privilege waiver.

Perhaps more important, however, is Director Thomsen’s discussion of the critical role attorneys play as gatekeepers in organizations. Quoting from the New York City Bar Association Report of the Task Force on the Lawyer’s Role in Corporate Governance (Nov. 2006), Director Thomsen reminds us that it “may take genuine professional courage to provide unwelcome advice and stick to it.”

As she continues, “[t]hese acts of courage can be dramatic—resigning for example. But more often, there will be less dramatic, but just as important, opportunities for lawyers to effect good. Encouraging a client to step back from a line rather than help the client squeeze as close to it as possible. Once you’ve figured out whether a particular course of conduct can be taken, encouraging everyone to think about whether it should be taken. When going through the process of looking back over events, whether in an internal investigation or otherwise, not only figuring out whether the conduct is legally defensible but also asking, the quieter questions, is it in the business’s long term interest? Is it behavior we want to encourage? Is it something we should be proud of?”

For a full copy of Director Thomsen’s speech, see www.sec.gov.

Tax Shelters Paid Off Until IRS Took an Interest

By NATHAN KOPPEL
May 17, 2007

In 1998, Chicago tax lawyer Paul Daugerdas approached a Dallas law firm, Jenkens & Gilchrist, with a proposition. He said he sold tax shelters and advice to wealthy clients, charging them, in part, a percentage of their tax savings. If Jenkens brought him aboard, he said, he could generate as much as $6 million a year in revenue, according to three former Jenkens partners.

To Jenkens, a medium-size firm with big growth plans, that was serious money, much more than any of its lawyers were then bringing in billing by the hour. And the overture came at the right time. Jenkens had recently lost some tax lawyers, and Mr. Daugerdas was offering to bring several others with him.

For more see Wall Street Online Journal.

New Study Says Average-size Organization now has over 250 TB of Storage Space for Archive-related Content

The time has come for organizations to invest the time and resources needed to have policies and procedures in place for effective information lifecycle management. The risk and cost of the status quo is becoming increasingly prohibitive.

TheInfoPro announced that about 12 percent of Fortune 1000 consider archiving as one of their top storage initiatives, and 25 percent listed poor archiving capabilities as one of the key reasons for storage growth. The latest TIP Wave Storage Study finds that an average enterprise has over 250 TB of storage space dedicated to archive-related content.

See Tekrati — The Research Analyst Reporter.

AMERICAN BAR ASSOCIATION NAMES DIRECTOR OF RULE OF LAW INITIATIVE

CHICAGO, May 10, 2007 – The American Bar Association today announced the appointment of Rob Boone as Director, ABA Rule of Law Initiative, effective Aug. 1. In this position, Boone will oversee the ABA’s rule of law activities, currently operating in 42 countries worldwide.

“Rob Boone brings outstanding experience for this newly created ABA position,” said Henry F. White, ABA executive director and chief operating officer. “His vision of the importance of the rule of law to individuals and governments, and his proven commitment to anti-corruption work, cross-border cooperation, and individual rights are critical factors in the work he will do with the ABA.”

ABA President Karen J. Mathis said, “Rob’s global credentials make him eminently qualified to lead the association’s initiatives that focus on Africa, Asia, Central and Eastern Europe, Eurasia, Latin America and the Caribbean, and the Middle East. The Initiative strives to expand recognition that adherence to legal concepts is fundamental to peace and prosperity worldwide. His record of accomplishments provides assurance that this goal will thrive.”

“I very much look forward to this exciting challenge and am honored to have been selected by the ABA for this opportunity,” Boone said. “Promoting the rule of law benefits people in every corner of the world, not only in terms of strengthening legal systems and human rights, but also in improving sustainable economic and social development. Advancing the rule of law will improve and save lives every day.”

From 2004-2006, Boone served as Chief of the Human Security Branch of the United Nations Office on Drugs and Crime (UNODC) in Vienna, Austria, with responsibilities for the organization’s global rule of law operations, and since 2006 he has been the UNODC Chief for Treaty and Legal Affairs. Before Vienna, he was based in Pretoria, South Africa, for three and a half years, where he was the UNODC Representative for Southern Africa, leading the organization’s regional field activities, including its training and technical assistance operations.

Before joining the United Nations, Boone held several positions with the United States government, including as Deputy Assistant Secretary of State (Bureau for International Narcotics and Law Enforcement Affairs) where he helped develop and manage the Department’s multilateral and bilateral rule of law and related foreign assistance activities. Boone also served as a Special Assistant in the Executive Office of the President (Office of National Drug Control Policy), and clerked in Los Angeles for United States District Court Judge Richard A. Gadbois Jr. From 1986 to 1992, Boone was a business litigation attorney with the California law firms of Browne & Woods and Irell & Manella.

Boone holds a master of science degree in foreign service from the Georgetown University School of Foreign Service, and he is a graduate of Harvard College (A.B. in government) and Harvard Law School (J.D.).

In his new position with the ABA, Boone will be located in Washington, D.C.

With more than 413,000 members, the American Bar Association is the largest voluntary professional membership organization in the world. As the national voice of the legal profession, the ABA works to improve the administration of justice, promotes programs that assists lawyers and judges in their work, accredits law schools, provides continuing legal education, and works to build public understanding around the world of the importance of the rule of law in a democratic society.

Judges Rule on Hard-to-Discover Data

By Ronni Abramson
Fulton County Daily Report
May 10, 2007

Federal judges have published opinions for more than 50 e-discovery disputes since the landmark amendments to the Federal Rules of Civil Procedure governing the discovery of electronically stored information went into effect on Dec. 1, 2006. These cases give — in almost real time — valuable insight into how judges are interpreting the amendments. These cases provide direction on how to handle the identification, preservation, collection, review and production of ESI in litigation going forward.

For more see law.com.

Departments of Justice, Treasury, and Homeland Security Unveil New Anti-Money Laundering Initiative

The U.S. Departments of Justice, Treasury and Homeland Security announced a joint National Money Laundering Strategy in a May 2007 report detailing continued efforts to dismantle money laundering and terrorist financing networks and bring these criminals to justice.

“The 2007 National Money Laundering Strategy is a direct result of close cooperation by the Departments of Justice, Treasury and Homeland Security, along with our foreign counterparts, and signifies our collective commitment to fight money laundering,” said Assistant Attorney General Alice S. Fisher of the Justice Department’s Criminal Division. “Implementation of this strategy will greatly assist in efforts to seize and forfeit millions in illegal proceeds that flow through the international financial system.”

For more see the DOJ Press Release dated May 3, 2007 and the text of 2007 National Money Laundering Strategy Report.

Stock Options Backdating Practices Continue to Haunt Silicon Valley and Cause Management Team Shake Ups

In the latest on the stock options backdating front, chip maket Marvell Technology Group Ltd. said today its chief financial officer resigned and its operating chief will step down as part of a management shakeup after the board found a pattern of abuse in the granting of stock options.

For more on this story, see Wall Street Online Journal.