Supreme Court Nets Sarbanes-Oxley Case Involving Fisherman

The U.S. Supreme Court recently agreed to hear a case that will determine the fate of a fisherman whose attempt to avoid penalties for catching undersized fish netted him a conviction for violating a law designed to prevent the destruction of corporate documents.

A friend-of-the-court brief filed by a public-interest law firm takes up the government's use of the Sarbanes-Oxley Act (SOX) to convict the fisherman by arguing that the law’s language is too vague and overly broad.

SOX penalizes those who shred or conceal corporate records by making it a crime to destroy "any record, document or tangible object" with the intent to obstruct an investigation. Applying a rather novel application of the law, federal prosecutors claim that a commercial fisherman caught with 72 undersized red groupers violated the law by tossing the fish overboard, rather than turning them over to authorities as ordered. The U.S. Court of Appeals for the Eleventh Circuit agreed, finding that a fish is a "tangible object" within the meaning of the law.

Opponents argue that such a broad application of the law raises significant SOX compliance issues for companies. Specifically, the brief argues —

  • The statute criminalizes ambiguous conduct and provides no clear, working definition of a "tangible object;
  • The criminal statute applies to economic activity that would be better addressed with civil enforcement; and
  • The statute was intended to apply to financial and white-collar crimes, not fishing.

According to these arguments, prosecutors overreached in applying the law to the fisherman, and to uphold such a vague and ambiguous definition of a "tangible object" deprives individuals and businesses of their due-process right to have "fair notice" of what is required to comply with the law. On the other hand under these arguments, a Court decision in favor of the fisherman would have minimal impact on SOX itself, but would be a significant over-criminalization of conduct such as the fisherman’s.

The Supreme Court will review this case in its next term, which begins in October. In the meantime, organizations should ensure that they have proper measures in place for SOX compliance.

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