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Web Watch: Best of the Week Ending May 11

Bruce Carton | May 11, 2012

Throughout the week over at Securities Docket I highlight the most interesting columns and blog posts from around the web on the subjects of SEC enforcement and securities litigation. Here is a digest of my picks for the week ending May 11.

What Is An Effective Compliance Program?
Richard Cassin, The FCPA Blog

Nearly five years ago, we talked about the requirements for an effective compliance program. By boiling down relevant parts of the U.S. Federal Sentencing Guidelines, we came up with ten elements that still work.

In securities suits, is D&O coverage pot of gold — or brick wall?
Alison Frankel, On the Case

Nearly five years ago, we talked about the requirements for an effective compliance program. By boiling down relevant parts of the U.S. Federal Sentencing Guidelines, we came up with ten elements that still work.

In an ideal world, the value of a shareholder securities claim rests entirely on its merits. And now that you've stopped snickering, let's talk about the real world, where two disputed settlements test the de facto assumption that securities claims are worth what a company's directors and officers insurance carriers are willing to pay to resolve them.

Here comes the shareholder litigation
David Marcus, The Deal Pipeline

According to a study done by Cornerstone Research and Robert Daines, a professor at Stanford Law School, “almost every acquisition over $100 million” announced last year attracted multiple lawsuits by target shareholders, who rarely received additional compensation as a result….

But what can't be denied is that shareholder litigators have bellied their way up to the M&A table, where all parties involved in a transaction — financial and legal advisers, accountants and public-relations firms, writers of fairness opinions, experts in due diligence and post-merger integration — gather to divide up the fees. It's unlikely they'll be persuaded to leave anytime soon.

A Man Overboard Will Not Sink the Ship: How Robust FCPA Compliance Can Keep a Company Out of Hot Water Even When An Executive is Neck Deep
Reid Whitten, Global Trade Law Blog

The story of one man prosecuted by the SEC and the DOJ for an FCPA violation may run a little below the radar these days, when allegations of bribery by manufacturing, retail, and entertainment companies plaster the headlines.  The guilty plea entered by an ex-Morgan Stanley executive, Garth Peterson, however, holds a very important lesson for companies that do not wish to see their own names on the broadsheets above a story about corruption enforcement actions. The lesson is simple: robust corporate compliance can protect a company even when a high-level employee commits brazen acts of bribery.

Wal-Mart Bribery Case Raises Fundamental Governance Issues
Benjamin W. Heineman, Jr., The Harvard Law School Forum on Corporate Governance and Financial Regulation

Wal-Mart appeared to commit virtually every governance sin in its handling of the Mexican bribery case, if the long, carefully reported New York Times story is true. The current Wal-Mart board of directors must get to the bottom of the bribery scheme in Mexico and the possible suppression by senior Wal-Mart leaders in Bentonville, Arkansas (the company's global headquarters) of a full investigation.

In addition, the board must also review – and fix as necessary – the numerous company internal governing systems, processes and procedures that appear to have been non-existent or to have failed. And, most importantly, it must define the CEO's core role as one which truly fuses high performance with high integrity, and does not exalt performance at the expense of integrity – and possibly discipline or remove the past CEO (still on the board) or the current CEO.