Have staffers at the Securities and Exchange Commission been watching too many episodes of The Sopranos or reruns of The Godfather? That’s what some would infer when tracking the Commission’s recent attack on securities lawyers; after all, when targeting Mafia families, the “feds” often look to target the lawyer or “consigliere” overseeing the Family’s affairs. […]
Regulatory Enforcement
Posted inBoards & Shareholders
WorldCom Settlement Collapse And Future Litigation
When former WorldCom and former Enron directors in January separately agreed to dip into their own pockets to partially settle shareholder lawsuits, some pundits proclaimed a new era of director vulnerability to future litigation. But, several weeks later, the WorldCom deal apparently collapsed when a judge in the case struck down another key provision of […]
Posted inRegulatory Enforcement
Case Shows Detail With Which Frauds Must Be Described
Arecent lawsuit involving the California Public Employees’ Retirement System and The Chubb Corporation took an unexpected turn—one that may have implications for other public companies that become subject to civil securities fraud suits. In 2000, CalPERS was the lead plaintiff in a class action accusing Chubb of falsely reporting the success of certain business initiatives, […]
Posted inRegulatory Enforcement
Justices To Decide Proof Required In Securities Fraud Suits
The U.S. Supreme Court will soon decide what investors have to plead and prove in order to recover for securities fraud on a “fraud on the market” theory. The case, which was argued on Jan. 12, represents the first major securities issue to go before the justices in a decade. The plaintiffs want the court […]
Posted inBoards & Shareholders
Two More Will Allow Investors To Nominate Directors
Talk about understatements. When $8.3 billion Ashland Inc. last week announced it had settled a class action lawsuit with the Central Laborers’ Pension Fund, it stated in a press release that it agreed to certain “modifications” of its corporate governance policies. Those slight modifications amount to the most radical governance changes a Fortune 500 company […]
Posted inBoards & Shareholders
WorldCom, Enron Settlements Could Yield Tougher Directors
Company board members have escaped the punishment meted out to executives and sometimes their lawyers and accountants for corporate fraud. Until now. Earlier this month former directors at WorldCom and Enron agreed to pay millions to settle shareholder lawsuits. Though the cases themselves are separate and the circumstances differ, both settlements mark a watershed event […]
Posted inRegulatory Enforcement
Avoiding Potholes When Guiding The Street
Companies today are faced with the complex challenge of providing quality guidance to the marketplace while simultaneously avoiding the scrutiny of the SEC and the plaintiffs’ bar. The pressure to increase transparency—coupled with the threat of regulatory and shareholder litigation—means that companies must walk a fine line between disclosing too much information and providing insufficient […]
Posted inRegulatory Enforcement
Impact Of SOX 804 Decision Unclear, May Be Broad
As we reported last year, the Second U.S. Circuit Court of Appeals in New York recently ruled against the retroactive application of Sarbanes-Oxley Section 804, which is the provision extending the statute of limitations on securities fraud cases. Before Sarbanes-Oxley, shareholders needed to file securities fraud claims within one year of discovering the fraud, and […]
Posted inEthics & Culture
SEC’s ‘Up-The-Ladder’ Claims In TV Azteca Case Overstated?
The Securities and Exchange Commission’s filing of civil fraud charges against TV Azteca on Jan. 4 appears to be the first enforcement action implicating the “up-the-ladder” attorney-reporting requirements of Sarbanes-Oxley. However, the case also highlights the fact that, at present, there is no requirement that the SEC be told of a corporation’s non-compliance with the […]
Posted inRegulatory Enforcement
Supreme Court Strikes Down Federal Sentencing Guidelines
In a fractured opinion released this morning in United States vs. Booker and United States vs. Fanfan, the United States Supreme Court struck down the 17-year-old federal sentencing guidelines, reducing them to advisory rather than mandatory status. The business community has been anxiously awaiting the Court’s decision to assess the impact on the federal sentencing […]