Dec 09

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A Fishy Application of the Sarbanes Oxley Act

sharkThe Supreme Court has been asked to decide the case of a commercial fisherman accused of harvesting fish too small to meet federal fishing guidelines.  The reason the highest court in the US will hear the case?  Federal prosecutors have applied provisions of the Sarbanes-Oxley Act in trying their case. The scope of such application is an issue of potentially wide reaching affect.

Fisherman John Yates was caught with the undersized fish by a fish-and-wildlife officer.  The officer issued a citation and ordered Mr. Yates to bring the fish back to port.   As Mr Yates violated that order and instead instructed his crew to throw the fish overboard, federal authorities claim that Yates violated components of the Sarbanes-Oxley Act. (“SOX”). SOX makes it a crime to destroy “tangible objects” in order to obstruct a government investigation.

However, many are questioning the application of this legislation, designed to prevent document and other evidence destruction in corporate fraud matters.  In this matter, Yates faced 20 years per discarded fish.  Although a jury convicted him (albeit with a 30 day jail sentence), the Supreme Court has so far seemed to question the sensibility of the government’s chosen path in relying on SOX.  A decision is expected by July 2015.

About the author

Renee Howdeshell

Renee Howdeshell is a founding member of Fulcrum Inquiry, an accounting, finance and economic consulting firm that performs damage analyses for commercial litigation, forensic accountings, royalty & distribution audits, financial investigations, and business valuations. Ms. Howdeshell holds a degree in Finance and Marketing from the University of Virginia's McIntire School of Commerce and is a Certified Public Accountant (CPA) and a Certified Fraud Examiner (CFE). She has testified as an expert witness in federal court, CA state court and arbitration regarding the results of her work. She can be reached at (213) 787-4112 and her resume is available at www.fulcrum.com.

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