On October 13, 2006, Jordan Eth of Morrison & Foerster, LLP gave a talk to attorneys on the risks and opportunities relating to Sarbanes-Oxley Section 404.
Eth stated that attorneys working in house should not always rely on attorney client privilege. There needs to be flexibility to waive privilege during government investigations.
Eth observed that after Sarbanes-Oxley, many companies have gone private instead of public. Initial public offerings have gone down 40% since 2005. Foreign markets such as AIM have become popular.
Litigation risks today include a longer statute of limitations for fraud. Companies should review their directors and officers insurance liability limits. There law is not settled as to liability relating to Section 302 certifications by the chief financial officer and chief executive officer.
Litigation opportunities include whistleblower protection for employees. OSHA whistleblower cases have grown from 180 in 2004 to 250 in 2005. Complaints should be taken seriously. They should be reviewed independently such as by outside attorneys. When discussing matters with the Securities and Exchange Commission, companies should be wary of which division they are talking to, such as whether it involves enforcement.
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