San Francisco (Aug. 13, 2003) -- At its annual meeting here, the American Bar Association voted to allow lawyers to turn in corporate clients who are committing fraud.

By a slim 218-201 margin, the ABA’s House of Delegates approved the measure, which requires lawyers to notify company management if they believe fraud is being committed. It also allows corporate attorneys to go to law enforcement authorities if the company does not respond.

At least year’s annual meeting, a similar proposal was shot down.

Proponents of the change maintained that it was better than a more stringent “report out” proposal currently being studied at the Securities and Exchange Commission, a rule stipulating that attorneys who have already "reported up" to management about fraud but have not received satisfactory answers or actions, must resign that client and notify the SEC.

-- WebCPA staff

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