What is the first step a securities lawyer must take if they identify a potential violation?

A securities lawyer is required to follow specific protocols when they identify a potential violation of securities laws. The first step a lawyer should take is to report the matter to the CEO or chief legal counsel of the client company. This action caters to the principle of upholding the integrity of the corporation, enabling those in charge to address the issue appropriately, assess the allegations, and take corrective measures if necessary. This aligns with the lawyer's duty to act in the best interests of the client, ensuring that the company has the opportunity to respond to any potential violations before other steps are taken.

This choice reflects the underlying ethical framework that governs the behavior of lawyers in corporate settings, adhering to the attorney-client privilege while ensuring compliance with legal obligations. By informing the appropriate internal parties, the securities lawyer enables the organization to act on the potential violation, such as self-disclosure to regulatory authorities if warranted.

The other options do not represent the correct first action required by a securities lawyer because they may bypass the internal resolution processes. For instance, informing the SEC immediately may not allow the company the opportunity to rectify the situation internally first. Consulting with other lawyers in the firm could delay addressing the issue directly with the company, and deciding to stop representing the client is an extreme action that