The V enable Report E N V I R O N M E N T A L C R I M E S B U L - PDF document

F E B R UA R Y 2 0 0 3 The V enable Report E N V I R O N M E N T A L C R I M E S B U L L E T I N Sarbanes-Oxley: Will A Law Governing Securities Increased Certification Obligations A ffect How Environmental Cases A re Prosecuted? One criminal offense created by the A ct received a lot of early publicity: Section 906 creates criminal penalties for certification of false financial reports by T corporate officers. The CEO and the CFO of an issuing he Sarbanes-Oxley A ct was passed in July of entity must now certify that financial statements comply 2002 to bolster federal securities laws in the wake of with Sections 13(a) or 15(d) of the Securities Exchange Enron, WorldComm, and other recent corporate A ct of 1934, and that the information “fairly presents” governance scandals. Nearly every significant the financial condition and results of business provision of the A ct will have an impact on operations. Knowing false certification is punishable by environmental compliance and how a fine of up to $1 million and imprisonment of up to 10 environmental crimes are pursued. The A ct will years. Willful false certification is punishable by a fine of affect how companies certify reports required under up to $5 million and imprisonment of up to 20 years. environmental regulations, as a result of the This provision, single-handedly , may reshape the increased standard of care imposed by the A ct for structure of A merican corporations. Companies, both purposes of SEC reporting. The A ct also amends large and small, must now devise systems that will allow Title 18 (U.S.C.) provisions that often serve as the the officers who must sign the financial reports to rely basis for charging environmental defendants by: absolutely on the process and people by which the I N T H I S I SSU E information for the reports was generated. Case in ( 1) broadening obstruction provisions to point, at the request of three senators, the General cover document destruction before the onset Sarbanes-Oxley: Will A Law Governing 1 A ccounting Office ( GA O) is investigating whether Securities Affect How Environmental of an investigation, the Securities and Exchange Commission’s ( SEC) Cases Are Presecuted? ( 2) increasing jail time for mail and wire requirements for disclosure of environmental Venable Expands Its Corporate 2 fraud several times over, and liabilities are ( 1) adequate and ( 2) being enforced Governance Team properly . The SEC requires companies to disclose ( 3) establishing criminal penalties for those Venable Publishes In-Depth Guidance 3 “material information” related to environmental on Corporate Governance and who retaliate against whistleblowers. liabilities. The GA O has been asked to determine if this Investigations In addition, the A ct directs the U.S. reporting standard (and its enforcement) are effectively 11th Annual ALI-ABA Conference on 4 Sentencing Commission to revise the federal Criminal Enforcement of providing appropriate environmental information to sentencing guidelines to reflect this new get- Environmental Laws shareholders. There is substantial concern that the tougher approach. The resulting stiffer vagueness of the reporting standard has resulted in Annual Conference on Wetlands Law 4 sentences will impact enforcement actions and Regulation considerable variation in the types and degree of beyond the straight white collar arena, and well information disclosed by companies. Venable Particiates in Other 4 into regulatory arenas. Key Events con tin u ed on pa ge 3

TH E VEN A B L E REP ORT V enable Expands Its Corporate Governance Team V enable recently added some important credentials to its corporate governance and investigations practice when the A ssistant Director in the Division of Enforcement at the Securities and Exchange Commission, Nancy Grunberg, and a well-known practitioner in securities regulation and corporate transactions, Frederic T. Spindel, joined the firm as partners in the Washington Office this fall. Ms. Grunberg spent nine years at the SEC over two separate stints, from 1988-92 and from 1996 until joining V enable. During the first period she was a trial attorney in the Enforcement Division, handling numerous insider trading and other securities fraud cases, as well as working on the SEC’s historic actions against Drexel Burnham and Michael Milken. In the past two years, as A ssistant Director in the Division of Enforcement under Stephen M. Cutler, she supervised dozens of investigations that, so far, have resulted in the filing of 30 judicial or administrative enforcement actions involving accounting fraud and improper financial reporting, as well as Internet fraud, insider trading, violations of the Foreign Corrupt Practices A ct, and various fraudulent international financial schemes. In between her stints in the Division of Enforcement, Ms. Grunberg served as Litigation Counsel for the SEC’s Office of International A ffairs. Mr. Spindel joins V enable with a career that combines a longtime private practice in securities regulation and corporate transactions with postings at two federal enforcement agencies regulating financial markets. Mr. Spindel spent six years with the U.S. Securities and Exchange Commission in the 1970’s, where he served as an assistant general counsel and was involved in a number of major policy initiatives and enforcement cases. He subsequently served for over three years with the U.S. Commodity Futures Trading Commission in a number of senior staff positions, including deputy general counsel. For the past 20 years, 2 Mr. Spindel has engaged in corporate and securities transaction and counseling practice for two national law firms, most recently in the Washington ( DC) and McLean ( V A ) offices of Pillsbury Winthrop, LLP. V enable attorneys who represent clients in environmental crimes cases work closely with Ms. Grunberg and Mr. Spindel. They bring their securities experience to V enable’s corporate governance and investigations practice under the charge of Benjamin R. Civiletti, former U.S. A ttorney General, who has directed a number of internal investigations for large corporations. In recent months, Mr. Civiletti has marshaled resources across the nearly 440 member firm to respond to the needs of clients facing manifold challenges under the new Sarbanes-Oxley legislation. One certain outcome of Sarbanes-Oxley will be an increase in corporate investigations, whether company-initiated or government- ordered, to examine potential sources of financial impropriety . V enable has led a number of large-scale investigations in the financial services, as well as industrial and commercial, sectors.