Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Sunday, October 28, 2007

Kaufman on Ethical Standards

Nationalizing Ethical Standards for Securities Lawyers, by MICHAEL J. KAUFMAN, was recently posted on SSRN.  Here is the abstract:

In his article, The Corporate/Securities Attorney as a Moving Target - Client Fraud Dilemmas, Marc Steinberg does an outstanding job of identifying the complex and significant ethical issues currently confronting securities lawyers. In this article, I attempt to explore the important legal and political implications of Professor Steinberg's salient points. First, the article places the absence of an independent obligation of an attorney to blow-the-whistle on a client in the context of evolving federal securities law precedent. Although the Seventh Circuit was unwilling to create a federal common law obligation to blow the whistle, other circuits have come close to doing so, creating a patchwork of judicial authority on ethical questions. Second, the article argues that the Sarbanes-Oxley Act, and the SEC Rules promulgated pursuant to its authority, may indeed impose upon attorneys a federal duty to disclose client confidences in certain situations. Third, the article observes that the creation of such a federal duty is consistent with a broader trend in securities law jurisprudence toward the creation of national standards. Finally, the article also suggests that an attorney's breach of the newly-created federal duty to blow-the-whistle on the client could itself give rise to a viable private right of action for securities fraud.

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