Audit Committee Chairmen in the Firing Line

Corporate Secretary
10.29.10
In this article, Dan Wendt discusses how audit committee chairpersons (ACCs), due to their control over personnel responsible for implementing a company's accounting policies and internal controls, are now exposed to increased risk of civil liability following the disclosure of any FCPA violations. This risk exists due to 'control person' liability under Section 20(a) of the Securities Exchange Act of 1934 (Exchange Act). The risk became manifest when a federal district court refused to dismiss a class action lawsuit against the ACC (among others) for Nature’s Sunshine Products (NSP), following the company’s disclosure of potential FCPA violations to the SEC and the Department of Justice (DoJ). Ultimately, the company settled the action against the CEO, CFO and ACC for a total of $6 million.
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