Regulatory Enforcement

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 […]

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 […]

Last month, President Bush signed into law the Class Action Fairness Act of 2005, which enables certain lawsuits commenced in state courts to be removed by a defendant to federal district court. The Act applies to class actions with more than 100 class members seeking more than $5 million, where at least one of the […]

The recent conviction of former WorldCom Chief Executive Officer Bernie Ebbers has raised a number of critical questions concerning the potential liability of chief executive officers at companies who wind up being accused of breaking the law. It has especially heightened the anxiety among some chief executives, who—under The Sarbanes-Oxley Act of 2002—must certify their […]

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 […]

Despite its reputation for ruthless enforcement, the U.S. Securities and Exchange Commission needs to strike a balance in its enforcement approach to deter misconduct but not squelch ingenuity, said Commissioner Cynthia A. Glassman in speech at a recent European corporate governance conference. Glassman “We must ensure that we enforce our laws, but do so in […]

A recent SEC investigative report may prompt companies to rethink a long-standard practice of including a copy of a merger agreement as an annex to the proxy statement mailed to shareholders when a merger is pending. The SEC’s report, issued in March 1, 2005, in connection with a settled enforcement action against Titan Corporation, warns […]

In a move that clearly turns up the heat on executive compensation, the Amalgamated Bank has filed lawsuits charging that executives at Cisco Systems and Tyson Foods illegally granted themselves stock options before they announced good news. Amalgamated Bank is the trustee for LongView MidCap 400 Index Fund and LongView Collective Investment Fund, which have […]

Two recent decisions by the largest federal circuit court in the country have some defense lawyers wondering if the pendulum is swinging against them in securities fraud suits. Until recently, the 9th Circuit—which includes California and a number of other western states—was considered the friendliest jurisdiction in the country for companies being sued by shareholders […]

The first whistleblower to prevail under The Sarbanes-Oxley Act of 2002 has now been awarded $175,000—including more than $100,000 in attorney fees—and has been ordered reinstated to his position as CFO of a small bank holding company. The whistleblower is entitled to get his job back even though it means that his successor will be […]