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10 General Counsel Charged This Year

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10 General Counsel Charged This Year
[By Brooke Heath]
2007 has been a record-breaking year for general counsel—but not in a good way! By the beginning of September of this year, 10 general counsel had been
charged with criminal fraud.




According to The National Law Journal,             In April charges against general counsel           In response to these claims, Linda Chatman
David Bayless, former head of the U.S.             for Apple Inc., Tenet Healthcare, Amkor            Thomsen, director of SEC enforcement,
Securities and Exchange Commission’s San           Technology Inc., and Mercury Interactive           said that the cases brought against the
Francisco office, said that the large number       were filed.                                        companies and their general counsel
of incidents surrounding general counsel this                                                         involved “secret slush funds, forgery, grants
year is “unprecedented.”                           In August Lisa Berry, formerly of KLA-             to fictitious employees, falsified corporate
                                                   Tencor Corporation and Juniper Networks            documents, self-dealing, self-enrichment,
“In the five years I headed the [SEC] office we    Inc., became the latest general counsel            and lying” to auditors, according to The
might have one case. They have done 0 in          to face charges. As General Counsel                National Law Journal.
one year,” Bayless explained.                      Consulting reported last month, Berry
                                                   allegedly backdated stock options for the two      “Are we overreaching?” Thomsen asked.
The majority of the charges brought against        companies from 997 to 2003.                       “You tell me.”
the general counsel were regarding stock-
option backdating. This disturbing “trend”         While the number of charges against general        On the net
started as early as 0 days into the year          counsel this year is unparalleled, some,
when William Sorin, general counsel for            like Melinda Haag, an attorney with Orrick,        Record Number of General Counsel Charged
Comverse Technology Inc., was fined by             Herrington & Sutcliffe, feel that the high         in 2007
the SEC for backdating, according to The           number of charges is a result of the SEC’s         www.law.com/jsp/ihc/PubArticleIHC.
National Law Journal. He agreed to pay             heavy focus on the group of attorneys.             jsp?id=9229387776
$3. million to settle a civil conspiracy
claim. One month after that, Kent Roberts,         According to The National Law Journal,             Fraud Charges Filed Against Former General
former general counsel for McAfee, was also        Haag represented at least three general            Counsel
charged with backdating.                           counsel who had been charged by the SEC.           www.lawcrossing.com/article/index.
                                                   She said that there “is little doubt the SEC       php?id=3537
In March charges were brought against              is focused on GCs as potential wrongdoers.
multiple attorneys, as two of Enron’s lawyers      The problem, in my view, is that the SEC’s         SEC Charges Former General Counsel
were accused of lying to auditors in a civil       suspicion about GCs has almost reached a           of KLA-Tencor and Juniper Networks for
enforcement case. That same month, Myron           level of paranoia—if they believe someone          Fraudulent Stock Option Backdating
Olesnyckyj, general counsel for Monster            within the company committed financial             www.sec.gov/news/press/2007/2007-70.htm
Worldwide, settled a claim brought by the          fraud, they assume in-house lawyers were
SEC for civil securities fraud.                    involved. It is difficult to convince them
                                                   otherwise.”




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Description: According to The National Law Journal, David Bayless, former head of the U.S. Securities and Exchange Commission's San Francisco office.
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