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Disclosures Of Qualified Legal Compliance Committees

Compliance Week | May 20, 2003

On January 23, the SEC codified rules imposing an "up-the-ladder" reporting requirement when attorneys become aware of material violations by the officers, directors or employees of thier companies.

According to the rule, an attorney must initially report such evidence to the company's chief legal officer or to both the CLO and chief executive officer.

Reporting attorneys who do not receive an appropriate response within a reasonable time must then report the evidence of a material violation up-the-ladder to the company's audit committee.

Alternative Reporting

But the SEC also provided an alternative reporting route for attorneys.

According to the rules, an attorney could satisfy the rule's reporting obligation by reporting evidence of a material violation to a "qualified legal compliance committee."

According to CCH Principal Securities Law Analyst James Hamilton, as he wrote in a March edition of Compliance Week, "Such a QLCC...

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