It’s the cover‐up that will get you!

If the past 30 years of history have taught anything, it is that white‐collar offenders often run afoul of the law by their participation in cover‐ups rather than their part in a substantive criminal offenses. In August 1974, President Richard Nixon was forced to resign as President of the United States ‐ not because of the Watergate break in itself, but his attempts to cover it up. President Clinton was impeached and narrowly avoided indictment ‐ not for his sexual escapades with Monica Lewinsky, but his attempt to redefine the word “is” during his testimony at a deposition. Recently, we have seen the demise of Arthur Andersen, LLP ‐ not as the result of a securities fraud conviction, but a conviction for obstruction of justice. Frank Quattrone was indicted recently for allegedly counseling the destruction of documents, and Martha Stewart was indicted, not for insider trading or the alleged conduct that first brought her under the microscope of the Securities and Exchange Commission (“SEC”) and Department of Justice (“DOJ”), but allegedly for misleading federal agents. This article will review the current round of indictments against Wall Street luminaries for obstruction, as well as the new obstruction provisions of the Sarbanes‐Oxley Act. It then will make some observations on how these events should impact a corporation’s document retention policy. Finally, it will discuss how compliance programs that aim to enforce the laws of this country and assist governmental inquiries may actually ensnare corporation employees in an obstruction trap.