Washington (Aug. 6, 2003) — As the Securities and Exchange Commission’s new code of conduct for lawyers went into effect Tuesday, some 90 percent of corporate attorneys surveyed by the American Bar Association said their clients may go silent on them if the regulator decides to broaden the code.
The SEC enacted the new code of “reporting up” conduct in January, which stipulates that corporate lawyers who discover wrongdoing in a company must report it to top management. If they don’t receive an adequate response, the attorney must then alert director committees and if necessary, the full board.
However, the SEC still is considering an expansion of the code to also require lawyers to "report out," a rule stipulating that attorneys who have already "reported up" but have not received satisfactory answers or actions, must resign and notify the SEC without explaining the reasons for the resignation.
The code extension is currently under study by the financial watchdog.
Some 62 percent of the lawyers polled said they expected the new code of conduct to affect them, while 25 percent said it would increase legal costs, according to the ABA survey of 100 lawyers conducted jointly with LexisNexis.
— WebCPA staff
