The Securities Industry and Financial Markets Association (SIFMA) applauds the recent decision of the U.S. Court of Appeals for the Second Circuit in U.S. v. Stein, et al. In Stein, the Court upheld a lower court’s decision to dismiss charges against thirteen former executives of accounting firm KPMG upon finding that prosecutors had coerced the firm to refuse to pay the legal costs for the executives. “KPMG faced ruin by indictment and reasonably believed it must do everything in its power to avoid it,” the Court explained.
SIFMA filed an amicus curiae brief in the case to emphasize that the discretion to advance legal fees to officers, directors, and employees is necessary and beneficial to firms, employees, and the marketplace.
“We are pleased that the court recognized that the advancement of legal fees is perfectly legitimate, and can be necessary to recruit and retain skilled employees in heavily-regulated professions,” said Steve Nickelsburg, of Clifford Chance US LLP, who led the team representing SIFMA in this case. “The prosecutors were wrong to treat fee advancement as reason for suspicion.”
SIFMA’s amicus brief is available at: http://www.sifma.org/regulatory/briefs/2008/SteinII-01-22-08.pdf
