White House Refuses to Produce Documents to Congressional Committee on Grounds of Executive Privilege

Associated Press
June 28, 2007 12:58 p.m.

WASHINGTON — President Bush, moving toward a constitutional showdown with Congress, asserted executive privilege Thursday and rejected lawmakers’ demands for documents that could shed light on the firings of federal prosecutors.

Mr. Bush’s attorney told Congress the White House would not turn over subpoenaed documents for former presidential counsel Harriet Miers and former political director Sara Taylor.

In reaction, Senate Judiciary Chairman Patrick Leahy accused the administration of shifting “into Nixonian stonewalling” and revealing “disdain for our system of checks and balances.”

For more see

Scrushy Sentenced To Nearly 7 Years In Bribery Case

By Ann Carrns and Valerie Bauerlein
Word Count: 945 | Companies Featured in This Article: HealthSouth

Richard M. Scrushy was sentenced to nearly seven years in prison for bribery, and a judge denied his bid to remain free pending appeal, putting the HealthSouth Corp. founder and former chief executive behind bars immediately.

U.S. District Judge Mark Fuller’s ruling last night to hand Mr. Scrushy and former Alabama Gov. Don Siegelman over to federal marshals was a surprise ending to a three-day sentencing hearing that capped the downfall of two longtime political and business giants. The judge left no doubt that he believed Mr. Scrushy had arranged for $500,000 in contributions to a foundation established by Mr. …

SEC Appoints its First Archivist to Preserve and Manage Records

On June 15, 2007, the Securities and Exchange Commission announced its appointment of David Brown as the agency’s first archivist. Recognizing the need to manage and preserve vital government records, the SEC appointed Mr. Brown, who previously served in leadership roles for the National Archives and Records Administration, to develop policies and procedures for the management of paper, electronic, video and audio records and information.

For more on the annoucement, see the SEC Press Release.

Controlling Electronic Discovery Cost Through Collaboration — ARMA International Hosts Conference on June 25-26, 2007

Contact: Ashley Flynn ARMA International
913.312.5561, aflynn@arma.org

Controlling Electronic Discovery Cost Through Collaboration
ARMA International Hosts Conference in June
E-Discovery and Beyond: Harnessing the Power of Collaboration

KANSAS CITY, MO—As organizations continue to grapple with ways to gain control over the escalating cost of electronic-discovery, records and information management has found unprecedented prominence in the board room. But e-discovery is a symptom of a bigger corporate challenge: how do we go about controlling email and other forms of electronically stored information? The answer lies in improving collaboration among managers and eliminating counterproductive silos in business today. Through collaboration your organization will be able to manage records and information better, give you a competitive advantage, and prepare you for the perils of e-discovery. ARMA International has answers at their first annual conference, “E-Discovery and Beyond: Harnessing the Power of Collaboration,” June 25-26 in Kansas City, Missouri.

The conference will explore many dimensions of collaboration and show how it can contribute to organizational performance and control e-discovery. Improved collaboration requires some an organizational change, and it is vital to have the Records and Information Management (RIM), Legal, Compliance, IT, and business units working together in order to comply with regulations, respond to litigation, and make better business decisions. Managers across all these areas of corporate governance are essential for a good information management program, and are encouraged to take advantage of this educational opportunity by attending together as a team.

Attendees will hear from experts at Lehman Brothers, Cargill, Booz Allen Hamilton, Fulbright & Jaworski, K&L Gates, Applied Discovery, Lexakos, Global Cyber Risk, Redgrave Daley Ragan & Wagner, The Glenmont Group, and more. Among topics covered will be the Federal Rules of Civil Procedure, e-discovery management, records access and security, and enterprise content management. Speakers will also discuss steps to integrate a RIM program into existing organizational processes, how to train and cultivate new RIM leaders, and how to create a secure, compliant infrastructure. The conference will feature a keynote address from Rick Wolf, founder of the consulting firm Lexakos, and former head of compliance for Cendant Corporation.

E-Discovery and Beyond: Harnessing the Power of Collaboration will take place at the Kansas City Airport Marriott June 25-26, 2007. Space is limited so register yourself or your teams today!

For more information or to get registered for E-Discovery and Beyond: Harnessing the Power of Collaboration please visit the site at www.arma.org/collaboration.

About ARMA International
ARMA International (www.arma.org) is a not-for-profit professional association and the authority on managing records and information. Formed in 1955, ARMA International is the oldest and largest association for the records and information management profession with a current international membership of more than 10,000. It provides education, publications, and information on the efficient maintenance, retrieval, and preservation of vital information created in public and private organizations in all sectors of the economy. It also publishes the award-winning Information Management Journal.

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Advisory Committee on Evidence Rules Takes Action to Moderate Privilege Waiver Provisions in Proposed Rule 502

Following extensive testimony and public comments earlier this year, the Advisory Committee on Evidence Rules has reported its recommendations to the Standing Committee on Rules of Practice and Procedure. The Advisory Committee’s recommendations can be found in its memorandum dated May 15, 2007. The recommendations were presented as an action item to the Standing Committee’s meetings on June 11-12, 2007. As the next procedural step, the Standing Committee would recommend rule changes to the Judicial Conference. Any rule proposed would eventually have to be directly enacted by Congress, inasmuch as the rules affect substantive privileges.

The Advisory Committee considered 70 written comments and held two public hearings where more than 20 witnesses testified. This post addresses a few but not all the changes proposed in the new rule.

Proposed Rule 502 would extend substantive decisions on privilege waiver in federal courts and make those decisions applicable in state court proceedings.

The Committee relaxed the requirements necessary to obtain protection against waiver for inadvertent disclosure. The latest draft of proposed Rule 502(b) only requires parties to take “reasonable steps” to prevent disclosure and promptly take reasonable steps to rectify the error. The Advisory Committee’s comments to the proposed rule make clear that the Committee relied on the testimony of corporate experts. Massive volumes of electronically stored information accumulated each year make it difficult and very expensive for a corporation to make meaningful, pre-discovery reviews for privilege. The Committee agreed, and the notes suggest, that having an effective records management compliance program, using linguistic tools or applying new search methodologies would be examples of taking “reasonable steps” to prevent disclosure.

Much of the debate leading up to the Advisory Committee’s report to the Standing Committee centered on the debate over new “selective waiver” provisions in subsection (c) and the so-called culture of waiver. The Advisory Committee decided to drop the selective waiver provision from the proposed new rule. The debate over selective waiver continues, however, in the courts, press, and in the form of proposed, new federal legislation. See earlier posts for more information on the selective waiver debate.

Brocade to Pay $7 Million Penalty to Settle Charges for Fraudulent Stock Option Backdating

As reported in an earlier post, the SEC has, indeed, settled backdating claims against issuer Brocade Communications Systems, Inc.

The SEC press release indicates that it filed “a civil action against Brocade Communications Systems, Inc., a San Jose, California computer networking company, for falsifying its reported income from 1999 through 2004. Brocade has agreed to pay a penalty of $7 million to settle the charges that it committed fraud through its former CEO and other former executives who repeatedly granted backdated stock options, misstated compensation expenses, and concealed the conduct by falsifying documents.”

For more see SEC Press Release.

Email Trail Comes Back to Haunt Former Executives: SEC Settles With Mercury Interactive and Sues Former Mercury Officers for Stock Option Backdating and Other Fraudulent Conduct

In an earlier post, it was reported that an allegedly inculpatory email trail between in-house counsel and executives at Mercury Interactive regarding stock options could lead to regulatory or criminal action. That possibility became a reality, as the SEC has announced a settlement stemming from that evidence discovered in the form of email.

In a press release, the Securities and Exchange Commission announced that it “filed civil fraud charges in federal district court for the Northern District of California against California-based software maker Mercury Interactive, LLC (formerly known as Mercury Interactive Corporation) and four former senior officers of Mercury — former Chairman and Chief Executive Officer Amnon Landan, former Chief Financial Officers Sharlene Abrams and Douglas Smith, and former General Counsel Susan Skaer. The SEC alleges that the former senior officers perpetrated a fraudulent and deceptive scheme from 1997 to 2005 to award themselves and other employees undisclosed, secret compensation by backdating stock option grants and failing to record hundreds of millions of dollars of compensation expense. The SEC also alleges that during this period Mercury, through Landan and at times Abrams, Smith or Skaer, backdated stock option exercises, made fraudulent disclosures concerning Mercury’s “backlog” of sales revenues to manage its reported earnings, and structured fraudulent loans for option exercises by overseas employees to avoid recording expenses. Mercury, which was acquired by Hewlett-Packard Company on November 8, 2006, after the alleged misconduct, settled the matter by agreeing to pay a $28 million civil penalty and to be permanently enjoined.”

For more see SEC Press Release and Complaint.