Record Retention Requirements for Securities Brokers and Dealers

Brokers and dealers engaging in securities transactions are required to maintain various records for varying periods under Securities and Exchange Commission rules. For example, "blotters" reflecting all purchases and sales of securities must be retained for six years. Copies of sale or purchase confirmations must be kept in an easily accessible place for two years and then for an additional year thereafter.

Directors' Reliance on Corporate Books and Records

When directors perform their corporate responsibilities, the duty of care requires them to exercise the care that an ordinary prudent person would exercise in the management of his or her own affairs under similar circumstances. To be able to invoke the protections of the business judgment rule, directors must make informed business decisions.

The Quiet Period Pending Securities Registration Statement Effectiveness

There is a "quiet period" between the time that a company files a registration statement with the Securities and Exchange Commission for a new public securities offering and the time that the Commission declares the registration statement effective. During the quiet period, referred to as the "waiting period" also, the company and related parties are prohibited by federal securities laws from releasing information to the public that could be construed as promoting sale of the securities covered by the as yet unapproved registration statement.

Enhanced Antitrust Criminal Penalty and Leniency Provisions

The Antitrust Criminal Penalty Enhancement and Reform Act of 2004, signed into law on June 22, 2004, as part of H.R. 1086, increased penalties for violations of the Sherman Act while increasing incentives for participation in the leniency program of the U.S. Department of Justice.

Statutory Conflict of Interest Provisions

A majority of states have statutes that address director and officer conflicts of interests in corporate transactions. The conflict of interest provisions vary from state to state; however, most states have enacted some version of the conflict of interest provisions contained in the Revised Model Business Corporation Act.