The Siemens inside counsel indictment and SOX

An inside counsel at Siemens USA, Ellen Roth, has been indicted for creating a minority-owned enterprise that helped Siemens secure a hospital contract, but was not a joint venture as the law required. Lattman has the story and the links.

I have some interest in the partnership angle -- that is, the nature of the profit-sharing relationship the law required.

But I’m also interested in the potential SOX angle. The indictment says that “SMS [the Siemens sub] relied on Roth to ensure legal compliance with the applicable ordinances.” Might this sort of thing trigger liability of the parent corporation or senior executives, either at the subsidiary or the head office, who certified adequacy of internal controls? Did they see the relevant business organization documents, including the email that the indictment says shows the absence of the requisite profit-sharing arrangement? If not, is the failure to examine or to insist on seeing those documents the absence of an internal control of which management had the requisite knowledge to trigger SEC sanctions under Section 302 and 906 of SOX (the latter includes criminal sanctions), or civil liability under 10(b) or 10b-5?

I'm not making any legal claims here, and of course I don't have the actual facts. But this hypothetical raises questions that I think indicate the potential scope of SOX.

Comments

[Robert Schwartz]

Here is another reason not to be a lawyer. She had no upside in the deal and now she looses her job, her profession and her freedom.

If she had been the fall guy for the mob, they would have taken care of her family. Siemens won't even send her a birthday cake in the slam.

My advice to her would be sing like a cannary. It's your only hope.