Wednesday, June 29, 2005

The SEC Focuses on Attorneys

One of the issues raised in the debate of the Sarbanes-Oxley Act was the role of lawyers in corporate misconduct.  One provision of the Act, Section 307, adopted the up-the-ladder reporting requirement for corporate counsel.  Another aspect of the SEC's push to regulate securities lawyers is to bar them from appearing before the Commission because of their role in a client's securities fraud, similar to a disbarment by a state bar but limited to the practice of securities law before the Commission.  Twice this week the SEC issued administrative orders, which were agreed to by the attorneys, imposing a bar from practicing before the Commission for their respondent's role in fraudulent transactions.  One attorney, Warren Soloski, a California lawyer, was outside counsel to a company and advised its CEO in the dissemination of false information to manipulate its market price (order here).  In the second action, David Klarman, another California lawyer, was general counsel to U.S. Wireless Corp. and was involved in the embezzlement of shares from the company.  In addition to his practice bar, in a separate injunctive action Klarman was ordered to disgorge over $3 million in ill-gotten gains (order here).  With all the allegations surrounding Milberg Weiss, the practice of securities law is coming under increased scrutiny for its ethical fiber. (ph)

Civil Enforcement, Securities | Permalink

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