Years after passage of the Sarbanes-Oxley Act of 2002, many companies still believe the act applies uniquely to public companies. In fact, private companies that ignore the act’s obstruction-of-justice provisions do so at their peril. Two increasingly important provisions of Sarbanes-Oxley were set forth in �� 802 and 1102 and codified, respectively, at 18 U.S.C. 1519 and 18 U.S.C. 1512(c). These provisions impose substantial criminal penalties on any individual or entity — public or private — for destruction of evidence or obstruction of justice regarding any actual or “contemplated” federal investigation, matter or official proceeding. A company therefore potentially could violate the law before an actual official governmental interest arises.

Thus, it is critical for every entity to ensure that its records-retention policy includes appropriate triggers — called “litigation holds” — to suspend the routine deletion of information for situations contemplated by �� 802 and 1102. There is, however, an elephant in the room — a “compliance gap” challenge that is of particular concern not only to quasi-governmental organizations but also to companies in heavily regulated industries facing routine government scrutiny. Those companies could find that an overbroad policy theoretically encompasses nearly all of their day-to-day work. Accordingly, those companies, even more than most, must balance the need for a practical records-retention policy with the need to comply with Sarbanes-Oxley’s mandates.

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