Before the U.S. Supreme Court issued its ruling in Dura Pharmaceuticals vs. Broudo back in 2005, experts hoped it would offer the final word on defining “loss causation.” The decision instead seems to have given three final words: No such luck. The Dura ruling did raise the bar for plaintiffs in securities class-action lawsuits, by […]
Stephen Taub
Posted inRegulatory Enforcement
Charting a Path Through Parallel Probes
Two years ago, Federal District Court Judge Ancer Haggerty dismissed a series of criminal indictments against three executives at FLIR Systems, and granted motions to suppress statements the three made to the Securities and Exchange Commission. The judge also blasted the “egregious behavior of the government” in using a civil SEC probe as cover to […]
Posted inBoards & Shareholders
Shareholder Activists Fall Short on Bank Attacks
Annual meeting season for the banking industry reached a crescendo at the end of last month, with high-profile shareholder gatherings at Washington Mutual, Citigroup, Merrill Lynch, and elsewhere. As one might expect in light of the credit crisis, banks found the meetings to be decidedly sub-prime experiences. The worst drama unfolded at Washington Mutual, which […]
Posted inBoards & Shareholders
Amid Tough Credit, MAC Clauses Return
The global credit crunch has not only dried up financing for many deals, it has prompted numerous private equity firms and companies to try to abandon deals they agreed upon before the economy faltered—with mixed success. The weapon of choice is the material adverse change clause (also known as the material adverse effect clause), a […]
Posted inRegulatory Enforcement
Qualcomm Mess Raises e-Discovery Issues
Qualcomm Corp. has started a fight with its own lawyers and IT consultants over one of the thorniest questions about legal discovery in the electronic age: Who’s responsible when a company fails to turn over electronically stored information? The dispute is unfolding in federal court in San Diego, Calif., where Qualcomm has been embroiled in […]
Posted inAccounting & Auditing
Study Points Restatement Blame Back at Cos.
A new academic study challenges the widespread notion that complicated accounting rules are mostly responsible for the surge in restatements in recent years. Rather, the study blames human error or, more precisely, errors made by accountants. “Restatements are most often caused by basic internal company errors unrelated to the accounting standards themselves,” the study flatly […]
Posted inRegulatory Enforcement
Delaware Denies Director’s Derivative Claim
The courts have repeatedly told potential plaintiffs that if they want to bring a derivative securities lawsuit, they must have owned shares in the company when the alleged misdeeds took place. Now the Delaware Supreme Court has shut the door on any corporate directors who think that standard doesn’t apply to them. The recent decision, […]
Posted inRegulatory Enforcement
Where Plaintiff Lawsuits Go After Stoneridge
When the U.S. Supreme Court recently gave its decision in the widely anticipated Stoneridge case—ruling that, usually, shareholders cannot sue a third party that abetted a company committing fraud—legal observers rushed to proclaim the death of so-called “scheme liability” lawsuits. The decision also capped a parade of cases that have increasingly restricted whom investors can […]
Posted inRegulatory Enforcement
BEA Deal Makes for a Tasty Poison Pill
A minority opinion in the world of corporate governance holds that poison pills and staggered terms for boards of directors are not the obstacle to shareholder rights that many claim them to be. Now BEA Systems has 2.71 billion reasons why that minority might be not be out in left field. That’s the premium BEA […]
Posted inRegulatory Enforcement
Pushing the Limits of Pension Fund Activism
The Department of Labor has tried yet again to referee the perennial battle between activist pension funds and corporations over how far each side can push for or against shareholder resolutions. Robert Doyle, director of regulations and interpretations at the Labor Department, issued a letter last month to the U.S. Chamber of Commerce intended to […]