Watch SOX or You Could Lose Your Shirt

Corporate accountability was the driving force for the Sarbanes-Oxley Act of 2002. With its signing, it simultaneously animated related regulatory and stock exchange rulemaking and enforcement actions. Heightened scrutiny and elevated legal compliance and ethical conduct rules have also ramped up the significance of the "court of public opinion."

"Successfully navigating through this maze of new standards and meeting the increasing expectations of shareholders and the public is critical not only to avoiding sanctions but also to preserving the reputation for integrity of organizations," said John Granda, a Kansas City attorney with Stinson Morrison Hecker LLP and former Counsel to an SEC Commissioner. "Prevention, Detection, Enforcement and Reputation are the buzz words here," he said.

Prevention. Every publicly-held organization should have a state-of-the art compliance program designed to ensure legal compliance and honest and ethical conduct. To be successful, these programs must be individually tailored to address the particular laws and regulations that are applicable as well as the unique business and industry environment in which the organization operates. At the same time, however, the compliance program must be pragmatic, workable and cost-effective

Detection. Regulatory and law enforcement officials will not give deference to compliance programs unless they are accompanied by sound monitoring techniques, whistleblower policies and other processes that are specifically designed to detect violations and attempts to violate the standards contained in them.

Enforcement. Even the most effective compliance program can be circumvented by persons intent upon committing illegal or fraudulent conduct. Protection of the organization often requires swift and effective enforcement action to demonstrate their commitment to legal compliance and ethical behavior and to position it as a victim who is trying to do the right thing.

Reputational Preservation. An organization's reputation for integrity and dealing honestly and fairly with all of its constituencies is often one of its most important assets. A teamwork approach is therefore needed involving management, public and investor relations professionals, and legal counsel to develop a communications strategy that appropriately takes legal defense concerns into account but does not let those concerns dominate the dialog that needs to take place with the organization's constituencies.

Stinson Morrison Hecker LLP, a law firm with more than 335 attorneys, maintains offices throughout the Midwest as well as in Phoenix and Washington, D.C. The firm has substantial experience in corporate and litigation matters in such areas as corporate finance, securities, construction, employment, e-commerce, financial institutions, real estate, health care, intellectual property, environmental, manufacturing, municipalities, pharmaceuticals, sports, telecommunications and utilities.

For information, contact John Granda at or at 816.691.3188.

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