After Sarbanes-Oxley: A Panel Discussion on Law and Legal Ethics in the Era of Corporate Scandal

Georgetown Journal of Legal Ethics, The, Fall 2003 by Gonson, Paul

The following is a transcript of a panel discussion from The Georgetown Journal of Legal Ethics 2003 Symposium, After Sarbanes-Oxley: A Panel Discussion on Law and Legal Ethics in the Era of Corporate Scandal. Participants on the panel included: George Cohen, Professor, University of Virginia School of Law; Susan Hackett, Senior Vice President and General Counsel, American Corporate Counsel Association; Lawrence Hamermesh, Associate Professor of Law, Widener University School of Law, Reporter, ABA Task Force on Corporate Responsibility; Richard Humes, Associate General Counsel, securities & Exchange Commission; and Thomas Morgan, Professor, The George Washington University Law School. The panel's moderator was Paul Gonson, Former Solicitor, securities & Exchange Commission, Of Counsel, Kirkpatrick & Lockhart. '

FATHER ROBERT DRINAN, SJ.

This Journal is more and more necessary. I got into this business way, way back when the S&Ls were around and most of you were hardly born. Suddenly it was a big, big scandal in the world - the savings and loans were losing billions, a man like Mr. Keating went to jail over it, and Jones Day had to pay millions of dollars. I was counsel for the Resolution Trust Corporation against banks all over the place. In any event, the law suit against this wonderful firm was settled for $52 million. We thought at that time that this was going to be the beginning of something in the legal world. Lots of people were humiliated and we thought we had resolved it with the enforcement and all. Suddenly we learned of Enron and one of their law firms. This gets seemingly worse every day. I met a woman in Massachusetts recently - she had just come back from a career as a public school teacher in California. The California trust fund for retired teachers bought $800 million worth of Enron stock and this poor lady thought that she was going to have a comfortable old age. Now, she has zero. As I understand it, they have no protection - no status in the bankruptcy of Enron. As you know, there is a massive suit against the lawyers and against Enron by lots of entities out in California. Senator Sarbanes was here about a month ago speaking about the Sarbanes/Oxley bill. He's an old, old friend. he came to Congress with me. Every time I read about this all I can say is what the famous judge Sporkin said: "Where were the lawyers"? But this is going to be around for a time; that's why this particular evening has very, very important significance. Mr. Paul Gonson will tell you how wonderful the people on this panel are, and there's a very good program here with all of the backgrounds of all of these distinguished panelists. I know Mr. Tom Morgan the best. he is a very distinguished person in this area. he used to be the Dean at Emory and then he taught in Utah. We all rely upon his writings and thoughts and with all of the others. Once again, I thank Jordan Smith and all of the editors and the distinguished panelists and all of you for being here.

JORDAN SMITH

Thank you, Father Drinan. At this time I'm going to ask Professor Donald Langevoort from Georgetown to introduce tonight's moderator.

PROFESSOR DONALD LANGEVOORT

Thank you Jordan. I'm going to be very quick because you don't want introductions, you want the program. My only role here is to introduce Paul Gonson, who is going to moderate this evening's program. I could give you a long list of Paul's credentials. Most notably, for nineteen years, from 1979 until 1998, he was the Solicitor at the sec in charge not only of appellate litigation but a wide variety of work relating to ethics, lawyers' professional responsibility, both inside the agency and with respect to the profession in general. The list could go on of the objective indicia of his distinguished career. I won't repeat that. What I want to do is just for a minute is a personal testimony. I was a young lawyer at the sec in the office of General Counsel in the late 1970s when Paul first began as Solicitor. When you are a young lawyer, you look around for people who are your role models, people who have the kind of character and integrity and commitment to professional responsibility that you would like to build your career on. You say to yourself, you should build your career around what that person is. For me, that person was Paul Gonson. Inside the agency in terms of what public officials should do to be good, outside the agency in terms of speaking to lawyers and others about how to carry out their responsibilities, Paul's voice was a very strong one, one filled with character and again one that spoke very much to a young lawyer at the agency. So with that, I will say Paul, you are a delight to have here. I suspect I could think of no one better to moderate this panel and so I'm going to turn it over to you.

PAUL GONSON

Thanks very much. Starting off the evening with a little embarrassment but I must say it's high praise to hear from Professor Don Langevoort that he felt that he should model himself after me. And he's done a good job. Tonight we're going to talk about the lawyers as a result of Sarbanes-Oxley, and I think that law is familiar to many of you. But perhaps for those of you who don't know much about it, let me just give a brief background. On july 30 of last year President Bush signed into law the Sarbanes-Oxley Act of 2002. This act is a very comprehensive amendment of the Federal securities laws. And it was named after its principal drafters, Representative Michael Oxley and Senator Sarbanes as Father Drinan has indicated, who are the respected chairmen of the House and Senate Oversight Committees of the sec in Congress. And the Act received almost unanimous support in Congress. Initially it was proposed as a response to the Enron scandal, and then the legislation quickly gained momentum as ever more scandals unfolded. This is against a backdrop of a long-running bear stock market and ever-increasing reports of misdeeds of high level corporate executives. So Congress watched public confidence erode in our nation's stock markets and in corporate America, and this act moved very swiftly to passage and signature in an endeavor to restore investor confidence.