Section 21(d)(2) of the Securities Exchange Act of 1934 permits the SEC to seek an officer or director bar if "the person's conduct demonstrates unfitness to serve as an officer or director of any such issuer." This section was the subject of an amendment via Section 305 the Sarbanes Oxley Act, which struck the previous standard of "substantial unfitness" and instead inserted "unfitness".

Recent articles and law firm client memos have expressed the conventional wisdom that Section 305 lowers the standard for an O&D bar, i.e., makes it easier for the SEC to obtain such a bar. At the recent ALI-ABA Securities Litigation conference in Boston, however, Thomas Newkirk, Associate Director of the SEC's Division of Enforcement, mentioned that some people are now arguing that the effect of Section 305 was just the opposite--that it is should now be harder for the SEC to obtain such a bar. Their logic, I assume, is that whereas before you needed to be "substantially unfit" (which might be read as "pretty much" or "mostly" unfit) to be barred, now you must be flat-out, 100% "unfit."

So which is it? Is someone who is "substantially unfit" better or worse than someone who is "unfit?"