Professional Responsibility Painter Fall 2017
Summary for Week 1
The law governing lawyers
–state law
–ABA
–federal regulation(public companies)
–Section 307
–SEC rule
2. client perjury dilemma
–clients are not entitled to to a lawyer who will lie or help them lie in sworn testimony
— Nix v. Whiteside
–ABA Model Rule 3.3 (candor to the tribunal)
— Rule 1.2(d) (lawyer may not assist a client in a crime of fraud). priority over the duty to keep client confidences. See Rule 1.6 (confidentiality)
3. duty to the client and duty to the legal system
–Rule 3.3 (candor toward the tribunal)
— Rules 1.6 (confidentiality)
–Rule 1.13 (organization as client)
4. practical disadvantages with the rule
— puts the lawyer in a difficult position
— discourage clients from telling the truth to their lawyers
— lawyers can get around it
— have a disparate impact on poor defendants in criminal cases
— could lead them to confront their client about perjury
5. state corporate law
— corporations, LLCs and similar entities are separate persons
— officers, directors, and shareholders have limited liability
— entity’s state of organization determines the obligations of directors and officers
— bondholders and creditors’ rights are determined by the state law
— securities laws often create additional rights and obligations with respect to both equity and debt holders.
Summary for Week 2—federal and state securities law
Security
–stock or bond
–orange tree, animal breeding schemes
2. 1933 Securities Act—registration and disclosure
— registration statement filed with both the SEC and with the state securities commission
— exceptions to the registration requirement is for private offerings
–Section 11 of the 1933 Act
–persons who will be liable to investors
–material misrepresentations or omissions
—company issuing the securities is strictly liable
— Other persons and entities can be sued is misleading, but they have a “due diligence” defense under Section 11(b)
—- Business lawyers??
3. 1934 Securities Exchange Act– a wide range of provisions
— public companies file 10Ks and 10Qs
— proxy statement filed with the SEC and that it be truthful
— general antifraud provisions in Section 10b and SEC Rule 10b-5
— anti-fraud rules apply to the purchase or sale of any security, whether the transaction was public or private.
4. Comfort Letter
–merger with Bromberg Instruments in which Bromberg shareholders with get CC
tement and closing the deal without correcting it
— Section 11 liability to investors
—- a lawsuit against the issuer of the debentures (CC), its directors (including Charlie) and the underwriters and accountants who audited CC’s financial statements.
— reporting up the ladder in each client organization
— required under Rule 1.13
—Sarbanes-Oxley Act (SOX) 307.
— avoid rendering any further assistance to fraudulent acts
— Model Rule 1.2(d)
— aiders and abettors of securities fraud under Section 10(b) of the Exchange Act
— blowing the whistle to the SEC
—ABA Model Rule 1.6
other examples of lawyers confronting client fraud situations
— lawyers representing savings and loans committing bank fraud
— representing a broker dealer (Salomon Brothers) that violated Treasury Department regulations
— Section 307 of the Sarbanes-Oxley Act of 2002
— current version of Rule 1.13 which requires reporting up
— Rule 1.6 which allows reporting out (whistleblowing) in client crime or fraud circumstances
