Recently, the SEC issued a series of final rules under the Sarbanes-Oxley Act of 2002 (the "Act"). Besides the obvious impact of these rules on accountants and broker-dealers that happen to be public reporting companies subject to the Act, they contain certain provisions that significantly impact non-SEC reporting broker-dealers, as well as the attorneys who work at such companies or represent them as outside counsel.
Attorney Conduct.
The final rule covering professional conduct for attorneys (Release Nos. 33-8185; 34-47276; IC-25929) prescribes minimum standards of professional conduct for attorneys who appear and practice before the SEC in the representation of issuers. The rule requires attorneys to report evidence of a material violation of securities laws or breach of fiduciary duty or similar violation by an issuer "up the ladder" within the company, to the chief legal officer or the chief executive officer. If the CLO or CEO does not respond appropriately, the attorney is
