Regulatory Enforcement

A federal judge in New York recently became the first to squarely rule that the Securities and Exchange Commission cannot hold a corporate officer or director liable for assisting in securities fraud if the person didn’t have “actual knowledge” of the wrongdoing. Griesa The SEC has taken the position that individual officers and directors face […]

In a case that again shows the difficulties the Securities and Exchange Commission faces in distributing legal settlements to aggrieved shareholders, the Commission recently asked a judge to let a $250 million settlement with Qwest Communications be disbursed by a private distribution agent, rather than the Fair Fund system created by the Sarbanes-Oxley Act. The […]

Virtue may be its own reward—but just to be safe, shareholders of Nortel Networks squeezed it into a $2.5 billion lawsuit settlement anyway. When Nortel announced last month that it agreed to pay nearly $2.5 billion in cash and stock to resolve investor claims stemming from three years of restated financial results in the early […]

In what could become a major headache for U.S. companies doing business overseas, a European advisory body says whistleblower systems and codes of conduct should be tailored to comply with each European nation’s data privacy laws. The pronouncement comes from the European Union’s Data Protection Working Party, and stems from a similar move by French […]

In what is believed to be the first case of its kind, an Indiana manufacturer settled charges with the Securities and Exchange Commission earlier this month that poor internal controls led to five years of sloppy accounting and a restatement that nicked company financial reports by $16 million. The Feb. 9 settlement with Cummins Inc., […]

The Sarbanes-Oxley Act has long wrapped up executives in a cloak of frustration. Now a high-powered legal challenge to the Public Company Accounting Oversight Board wants to unravel the whole thing. At issue is the very constitutionality of the PCAOB, and whether it wields so much influence over public commerce that its members should be […]

The Securities and Exchange Commission may need to reconsider how it coordinates investigations with the Department of Justice in light of a recent decision by a federal judge throwing out criminal securities fraud charges due to the too-cozy relationship between the SEC and DOJ. Judge Ancer Haggerty of the U.S. District Court in Oregon wrote […]

A recent Delaware Chancery Court decision raises questions about several well-established merger transaction procedures that prior court rulings had viewed favorably. In the case, In re TeleCommunications Inc. Shareholders Litigation, the court allowed a challenge to a 1998 merger between TCI and an AT&T subsidiary to go to trial, citing “genuine issues” about whether the […]