Law Firms Review Compliance Measures After Attorney Arrests in Insider Cases
Posted Nov 13, 2009 4:36 PM CST
By Martha Neil
Recent charges by federal authorities that three current or former BigLaw attorneys illegally made securities trades—two of them allegedly using inside information gleaned from the law firms that employed them—have sparked renewed vigilance at many legal partnerships.
Law firms are reviewing the security measures and training they use to keep confidential information confidential, and, in some cases, imposing stricter standards, reports Bloomberg.
Counsel Thomas Tinkham of Dorsey & Whitney says the firm now requires senior partners who keep materials in an electronic database to make all files restricted and affirmatively decide which employees will be permitted access, reports Reuters.
The security enhancement was made after Dorsey & Whitney learned that a former partner, Gil Cornblum, was being investigated by the Securities and Exchange Commission on suspicion of trading on information from such documents. He committed suicide last month, just before he was apparently scheduled to take a plea in an insider trading case.
Partners at firms that have steered clear of such scandal are sympathetic, saying that even the most restrictive security measures might not protect confidential information from a rogue employee who is determined to transgress, reports Reuters.
"The policies are sufficient. It's just human nature is what it is," partner Harold Gordon of Jones Day told Reuters in another story. "It is virtually impossible to stop a rogue attorney from revealing client confidences if they are going to insist on doing that."
ABAJournal.com: "Lawyer Raided Sullivan & Cromwell Offices for Inside Info Years Ago, Court Filings Say"
ABAJournal.com: "Former Sullivan & Cromwell Lawyer is Among Galleon Defendants"
ABAJournal.com: "Ropes & Gray Associate Arrested in Galleon Probe"