For the third time in the last seven months, the nation’s largest federal appellate court has reinstated a securities fraud lawsuit that a trial judge had dismissed under a 1995 statute meant to weed out costly suits. In reviving a complaint against the corporate successors to the investment bank Schroders & Co., the San Francisco-based […]
Martinek Paul J.
Posted inFrom the Archive
In Seeking Disgorgement, Is Base Salary Fair Game?
Some experts say that the Securities and Exchange Commission is overstepping its authority in demanding the return of an officer’s base salary as part of disgorgement. Historically, disgorgement penalties were targeted at bonuses and other incentive-based compensation. But in recent years, the Commission has also sought to have officers cough up their base salary, or […]
Posted inFrom the Archive
SEC’s Reg. M Guidance Targets Aftermarket Statements
The Securities and Exchange Commission this month issued guidance concerning Regulation M, which governs prohibited conduct by underwriters in connection with initial public offering allocations. Some experts say the move will chill the ability of underwriters to say anything to customers about the aftermarket in connection with hot IPOs. Paul Uhlenhop, a securities lawyer at […]
Posted inAccounting & Auditing
Bankers Group Asks SEC To Address SOX Auditing Overlap
The nation’s largest banking association last week asked the Securities and Exchange Commission to revise aspects of The Sarbanes-Oxley Act of 2002—claiming that the “troubling regulatory challenge” for small banks and other businesses is far too costly and results in unnecessary duplication of auditing work. The letter by the American Bankers Association to SEC Chairman […]
Posted inInternal Controls
SEC Probe Into Foamex Internal Controls Won’t Be Last
Foamex International disclosed last week that it is the subject of an informal inquiry by the Securities and Exchange Commission relating to the company’s internal controls—marking what appears to the first time that a Commission investigation specifically targeting internal controls under The Sarbanes-Oxley Act of 2002 has been made public. In announcing its fourth quarter […]
Posted inFrom the Archive
Private Reaffirmation Of Earnings Violated Regulation FD
The Securities and Exchange Commission last month for the first time found that a company violated Regulation Fair Disclosure by reaffirming a previous earnings guidance in a private meeting with securities analysts. Regulation FD prohibits issuers from selectively disclosing material, nonpublic information to securities analysts, broker-dealers, investment advisers and institutional investors before disclosing the same […]
Posted inInternal Controls
Companies Trumpet SOX 404 Passing Grade; No Impact
In what some might consider a rash of corporate bragging, several companies in recent weeks have issued press releases touting successful compliance with Section 404 of The Sarbanes-Oxley Act of 2002 Nothing in SOX compels such public fist-pumping; the statute merely requires notification to the Securities and Exchange Commission in formal filings. But after tackling […]
Posted inRegulatory Enforcement
SEC Given Broad Power To Freeze Extraordinary Payments
A federal appeals court last week gave the Securities and Exchange Commission broad power under The Sarbanes-Oxley Act of 2002 to freeze “extraordinary payments” to company officers that are made when the Commission is investigating possible wrongdoing. A three-judge panel of the San Francisco-based 9th Circuit Court of Appeals initially held in May 2004 that […]
Posted inEthics & Culture
Ethics Waivers Rare; Most Posted On Corporate Web Sites
Waivers to company codes of ethics have been relatively rare, and when they have been made they have generally been revealed on the corporate Web site rather than in 8-K filings with the Securities and Exchange Commission. Under SEC rules adopted in January 2003 under The Sarbanes-Oxley Act of 2002, companies are not required to […]
Posted inRegulatory Enforcement
‘Aftermarket’ Buyers Can’t Sue Over IPO Misstatements
A federal court has refused to make it easier for “aftermarket” purchasers of stock to sue over misstatements made in registration statements to the Securities and Exchange Commission in connection with an IPO. The Securities Act of 1933 allows “any person acquiring” shares issued pursuant to an untrue registration statement to sue for damages. That […]