The U.S. Securities and Exchange Commission (SEC) has been cracking down on General Counsels this year more than ever, according to an article released today by the National Law Journal. Experts say the increased prosecution comes from the SEC’s backlash after a proposed regulation in the Sarbanes-Oxley Act was revoked.

The regulation would have made it mandatory for corporate lawyers to report any “suspected wrongdoing” from business leaders within their company to outside government officials, according to the article.

David Bayless, former head of the SEC’s San Francisco office, had this to say:

“What is happening now is the SEC is trying to deputize general counsels. If a GC is aware of wrongdoing they are going to have to report it or else be a potential target of SEC actions. It is quite scary.”

Read the entire article here.

Commentary: This is an important trend for general counsels to be aware of. Even though GCs are not obligated to report any findings of illegal activity, it doesn’t mean that they’re in the clear from government oversight. Fortunately for corporate counsel everywhere, the Attorney-Client Privilege Protection Act of 2007 (a bill which would effectively decimate the SEC’s ability to waive attorney-client privilege) has already passed the House and is being discussed in the Senate.