Tuesday, April 23, 2024

SOX prohibition on record tampering applied outside of securities context

By Anne Sherry, J.D.

A pair of provisions inspired by Enron’s document destruction have applicability beyond the securities context. The D.C. Circuit recently held that the provisions apply to election fraud and to an obstruction charge in the prosecution of a January 6 participant. In oral argument in the appeal of the latter case, the Supreme Court grappled with how broadly to construe Sarbanes-Oxley’s prohibition on “otherwise obstruct[ing]” an official proceeding (U.S. v. Benton, April 19, 2024, Henderson, K.).

The criminal law provisions. Sarbanes-Oxley added several provisions to title 18 of the U.S. Code in the wake of Enron and other accounting scandals. Section 1512(c) sets forth the punishment for a person who “corruptly (1) alters, destroys, mutilates, or conceals a record, document, or other object, or attempts to do so, with the intent to impair the object’s integrity or availability for use in an official proceeding; or (2) otherwise obstructs, influences, or impedes any official proceeding, or attempts to do so.”

Section 1519 states the penalty for a person who “knowingly alters, destroys, mutilates, conceals, covers up, falsifies, or makes a false entry in any record, document, or tangible object with the intent to impede, obstruct, or influence the investigation or proper administration of any matter within the jurisdiction of any department or agency of the United States or any case filed under title 11, or in relation to or contemplation of any such matter or case.”

Read the rest of the story and other securities news from Wolters Kluwer at VitalLaw.com.