Question to ponder, scrutiny alerts and updates, Caremark, and for the reading stack. It’s all here in the Friday roundup.
Question to Ponder
If publicly-traded companies can put law enforcement to its burden of proof in peer countries, why do publicly traded companies (nearly universally) roll over and play dead when the subject of U.S. law enforcement inquiries?
As we say not as we do, scrutiny alerts and updates, and further RIP to the “Arthur Andersen effect.” It’s all here in 200th edition of the Friday roundup.
As We Say, Not As We Do
This previous post highlighted the April Fools’ Day 2015 SEC enforcement action against KBR for its non-existent, theoretical muzzling of individuals in certain employment agreements. According to the SEC, this violated SEC Rule 21F-17, which provides in relevant part: (a) No person may take any action to impede an individual from communicating directly with the Commission staff about a possible securities law violation, including enforcing, or threatening to enforce, a confidentiality agreement . . . with respect to such communications.”
In the early 2000s, an isolated event occurred which caused the DOJ to reconsider its traditional approach to resolving alleged instances of corporate criminal liability.
Upon being criminally indicted, Arthur Andersen exercised its constitutional right to a jury trial and put the DOJ to its burden of proof and in 2002 the jury criminally convicted the business organization of obstruction of justice. As a result of the criminal charges and criminal conviction, Arthur Andersen suffered numerous collateral consequences, including the loss of its certified public accounting license and the resulting inability to audit public companies.
