The events leading to the adoption of Sarbanes-Oxley featured the CEOs and CFOs who cooked the books and the inept auditors who failed to discover or overlooked same. Consequently, the wrath of Congress was directed primarily at corporate officers and auditors, but attorneys were not entirely overlooked by the Act. The bill as introduced in the Senate and adopted by Congress included a provision that codifies the Commission's Rule 102(e), which provides grounds for disqualifying attorneys practicing before the Commission, including on the ground of improper professional conduct. See § 39:16. While the bill was going through the Senate, some professors called the Senators' attention to a well-kept secret. The Commission for years apparently had followed a policy of using Rule 102(e) vis-à-vis attorneys only if they were found in another proceeding to have violated the federal securities laws. See § 39:20. This made some Senators irate and the Senate added and Congress adopted Section 307 requiring the Commission to adopt a rule "setting forth minimum standards of professional conduct" for attorneys and to disqualify them from practicing before the Commission if they violate that rule. Section 307 directed the Commission to require by rule an attorney representing an issuer to report "evidence of a material violation of securities laws, a breach of fiduciary duty, or similar violations by the company or any agent of the company" to the chief legal officer or chief executive officer of the company. If appropriate corrective action is not taken, the attorney under the rule is to go up-the ladder to the audit committee, or a committee of the board consisting of non-management directors, or to the board of directors. See § 39:21.

The Commission rules implementing Section had to be and were adopted by January 26, 2003. The Commission's task in adopting the rules was a daunting one and the final rules in some respects are not a model of clarity. See § 39:23. We have attempted to connect the dots commencing at § 39:24. The proposed rules went beyond what the Act required in the event the attorney went up-the-ladder and the issuer was not responsive. The noisy withdrawal aspect of the proposed rule was very controversial and although not adopted has been reproposed in a somewhat different but not less controversial manner. See § 39:44. The Commission also adopted a provision purporting to allow attorneys under certain circumstances to elect to blow the whistle, which is being challenged as contrary to the attorney-client privilege. See § 39:43. The House of Delegates of the American Bar Association at its annual meeting on August 11–12, 2003 adopted by a narrow vote amendments to Rule 1.13 of the Model Rules of Professional Conduct that requires an attorney in the event of violations of law likely to result in a substantial injury to the corporation "to refer the matter to higher authority in the corporation." Together with the comments to the section, to some extent it provides a better-defined up-the-ladder requirement than Section 307.[FN1] At the same meeting, the House of Delegates adopted amendments to Model Rule 1.6, "Confidentiality of Information," allowing an attorney to reveal information necessary "to prevent a client from committing a crime or fraud reasonably certain to result in substantial injury to the financial interests or property of another."[FN2] A pre-condition to this very controversial provision is that the client used or is using the lawyer's services in furtherance of such crime or fraud. Rule 1.6 was also amended to permit similar disclosure under similar circumstances by an attorney to mitigate or rectify a substantial injury that has already occurred. Section 307 is likely in any event to have a greater impact on securities practitioners than any other event since the adoption of the Securities Acts. See § 39:46.