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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 involved “secret slush funds, forgery, grants

of incidents surrounding general counsel this 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 10 in

to face charges. As General Counsel

National Law Journal.

one year,” Bayless explained.

Consulting reported last month, Berry

year is “unprecedented.”

allegedly backdated stock options for the two

“Are we overreaching?” Thomsen asked.

companies from 1997 to 2003.

“You tell me.”

option backdating. This disturbing “trend”

While the number of charges against general

On the Net

started as early as 10 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 $3.1 million to settle a civil conspiracy claim. One month after that, Kent Roberts, former general counsel for McAfee, was also charged with backdating.

heavy focus on the group of attorneys.

jsp?id=1191229387776

The majority of the charges brought against the general counsel were regarding stock-

According to The National Law Journal,

Fraud Charges Filed Against Former General

Haag represented at least three general

Counsel

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/2007/2007-170.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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10 General Counsel Charged This Year  

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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