Policies And Processes For Company Attorneys Reporting Legal Violations Including Compliance With Sec Rule 205
The United States Securities Exchange Commission has adopted Rule 205, requiring certain COMPANY attorneys to report violations of certain U.S. laws to higher authorities within COMPANY. The policies and processes outlined below are intended to assist COMPANY’ in-house attorneys in complying with this requirement. Similar policies and practices have been adopted with respect to outside counsel for COMPANY (who are also subject to SEC RULE 205).
Reporting Violations Not Required by SEC Rule 205
COMPANY Legal Department has long encouraged all of its personnel to report, in good faith, any problems or issues they become aware of, especially those that involved violations of the law or legal duties by COMPANY employees or agents.
The adoption of SEC Rule 205 does not change this philosophy. COMPANY Legal Affairs continues to strongly encourage such reporting by all members of Legal Affairs – even if SEC Rule 205 does not require such reporting. To be specific, COMPANY Legal Affairs urges non-lawyers (as well as lawyers) to report violations, urges reports even if the violations are not “material”, and urges reports of violations that do not involve U.S. Securities laws or fiduciary duties.1
As a reminder, these reports may be made through a variety of means:
If you desire to report anonymously, you may report through
- The Audit Committee’s anonymous e-mailbox at cglegler@aol.com
- The Director of HR @ 713-369-1710, nderoche@synagro.com
- The General Counsel’s anonymous e-mailbox at athomas@synagro.com or his telephone number 713-369-1703
If you do not desire to report anonymously, you may report through the same contacts including:
- Any Company Lawyer, including the General Counsel
However, if you decide that Rule 205 requires you to make a report, it triggers a number of specific obligations on your part and that of your supervisory attorney and/or the General Counsel and possibly others. Therefore, you should report under Rule 205 only if you have determined that you are (or may be) required to do so. If you are not required to do so, you should make your report in any of the variety of means listed above.
Help in Determining Whether An SEC Rule 205 Report is Required
The determination as to whether an SEC Rule 205 reports is required is ultimately that of the individual attorney. COMPANY Legal Affairs should not and will not dictate such a decision. However, if you are considering reporting under SEC Rule 205, and desire to consult with another attorney, you may contact any of the following internal resources to discuss your obligations &/or the appropriate process:
Alvin L. Thomas, EVP General Counsel
Dvosha Roscoe, Assistant General Counsel
Catherine Kurtz, Corporate Counsel
Nikki Deroche-Ayers, HR Director
COMPANY attorneys have an ethical obligations to maintain COMPANY confidences as well as the attorney-client privilege. You should NOT discuss specific confidential or privileged information with anyone outside of COMPANY in connection with Rule 205 obligations without ensuring that such a consultation maintains COMPANY confidences and the privilege unless applicable law specifically requires or allows you to do so.
It is COMPANY policy and that of Legal Affairs that you should not be subject to any retaliation or discipline for making a good faith report, whether under Rule 205 or pursuant to the COMPANY code of Business Conduct or any other COMPANY policy.
What to Do if An SEC Rule 205 Report is Required
Mandatory Requirements
If you decide to make a report under Rule 205 you MUST advise if you are doing so by stating that you are “Reporting under SEC Rule 205” or Reporting under SEC rules on attorneys” or similar language that clearly states that you are doing so. Because such a report will trigger specific obligations for you and the attorney to whom you report it, clearly identifying the report as a Rule 205 report will ensure that it is handled in accordance with the SEC Rule.
You MAY NOT make a Rule 205 report anonymously, since in many cases, the General Counsel must be able to respond to you concerning your report.
You SHOULD report to the General Counsel directly and immediately if you believe you are subjected to any harassment, retaliation or other disadvantage because you made a Rule 205 report.
Preferred Practices:
In addition to the above requirements, COMPANY Legal prefers:
- That all Rule 205 reports to be made to your supervisory attorney (if you have one) or, if none, to the General Counsel (and not both the General Counsel and the CEO)
- That all 205 reports to be made, unless and until otherwise requested by the General Counsel, orally, in person if possible, but if not via secure land line telephonic connection (NOT via e-mail or cell phone)
- That you specify the purpose of the meeting as a Rule 205 (or similar language) report when making the appointment to deliver your report
- That another person other than your supervisory attorney or the General Counsel be present to take notes2
- That your report be made as soon as possible after you become aware of information that triggers your obligation to report.
- That your report contain as much detail as possible to allow an expeditious investigation (but not waiting to cross every “T”)
- That you NOT undertake an investigation yourself unless and until so directed by the General Counsel
- That you advise the General Counsel if you are dissatisfied with his response or are considering reporting to the Audit Committee or Board (for example, if you believe he has not responded promptly enough) to allow a change for him to provide you with additional information
- That you promptly advise the General Counsel if any outside counsel notifies you that they are considering or may need to make a Rule 205 report
- That you advise the General Counsel as far as possible in advance if you believe you are permitted to and intend to report any violation covered by Rule 205 to persons outside the Company in order to allow a chance for him to provide you with additional information that might be pertinent to your decision
If you are a supervisory attorney
- That you advise the General Counsel if a subordinate attorney makes a Rule 205 report to you even if you determine that there is not credible evidence that is reasonably likely that material violation has occurred and hence no further reporting is required
- That you make any report to the General Counsel regarding a report received from a subordinate attorney orally, directly, expeditiously, in as much detail as possible and without conducting any investigation; if you have determined that the evidence raised by the subordinate attorney is not credible or that the violation is not covered by SEC Rule 205 (e.g., is not material) or for any other reason SEC Rule 205 does not in fact require a report under the circumstances, the basis for that determination
1 In some jurisdictions, lawyers may be under an ethical obligation to report certain types of legal violations to higher authority in the company, or, in some cases, outside the company. Additionally, other company policies may also require attorneys to report situations involving financial or other misconduct in situations to which Rule 205 does not apply
2 If for any reason you have specific concerns about any individual attorney being present at such a meeting, please make that known when scheduling your meeting.
