YourABA July 2011 Masthead

SEC recognizes importance of attorney-client privilege in final whistleblower rules following ABA action

The Securities and Exchange Commission—in response to concerns raised by the ABA, U.S. Chamber of Commerce and numerous other legal and business organizations—recognized the importance of protecting the attorney-client privilege and the confidential lawyer-client relationship in its final whistleblower rules issued May 25.

ABA President Stephen N. Zack commended the commission for its action, saying “The SEC’s final rule is welcome recognition of the critical importance of the attorney-client privilege and client confidentiality, both as fundamental principles of our legal system and as the most effective means of promoting corporate compliance with the federal securities laws.”

The final rules issued under the Dodd-Frank Act make it clear that, while whistleblowers who voluntarily provide the SEC with original information regarding violations of the federal securities laws may be entitled to receive substantial cash awards, lawyers will not be eligible to receive such payments if they have divulged privileged or confidential information they obtained from clients during the course of their professional representation in violation of the lawyer’s ethical obligations.

Zack continued, “Lawyers should not be rewarded for divulging privileged or confidential information their clients provide when receiving legal advice; the commission’s final rules reflect this important principle.”

Prior to the SEC’s decision, the ABA wrote to the commission’s chairman, Mary L. Shapiro, asking that the final rules adequately safeguard the attorney-client privilege and the fundamental right to effective counsel. In the letter, Zack emphasized that the “confidential relationship between the client and the lawyer is sacred, and lawyers are ethically bound to maintain all confidential client information, not just that which is privileged or protected by the work product doctrine.”




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