19 Pages Posted: 20 Oct 2007
In his article, The Corporate/Securities Attorney as a Moving Target - Client Fraud Dilemmas, Marc Steinberg does an outstanding job of identifying the complex and significant ethical issues currently confronting securities lawyers. In this article, I attempt to explore the important legal and political implications of Professor Steinberg's salient points. First, the article places the absence of an independent obligation of an attorney to blow-the-whistle on a client in the context of evolving federal securities law precedent. Although the Seventh Circuit was unwilling to create a federal common law obligation to blow the whistle, other circuits have come close to doing so, creating a patchwork of judicial authority on ethical questions. Second, the article argues that the Sarbanes-Oxley Act, and the SEC Rules promulgated pursuant to its authority, may indeed impose upon attorneys a federal duty to disclose client confidences in certain situations. Third, the article observes that the creation of such a federal duty is consistent with a broader trend in securities law jurisprudence toward the creation of national standards. Finally, the article also suggests that an attorney's breach of the newly-created federal duty to blow-the-whistle on the client could itself give rise to a viable private right of action for securities fraud.
Keywords: sarbanes oxley act, SEC, fiduciary responsibilities, confidentiality, whistle blowing, securities fraud
JEL Classification: K22, K42
Suggested Citation: Suggested Citation
Kaufman, Michael J., Nationalizing Ethical Standards for Securities Lawyers. Washburn Law Journal, Vol. 46, p. 109, 2006. Available at SSRN: https://ssrn.com/abstract=1023010