The civil fraud charges levied by the Securities and Exchange Commission against former Kmart chief executive officer Charles Conaway and former chief financial officer John McDonald are the latest sign that the SEC is keeping its promise to carefully scrutinize the disclosures made by companies in the Management’s Discussion and Analysis section of their periodic […]
Regulatory Enforcement
Posted inRegulatory Enforcement
SEC Amends Rules To Protect Short-Swing Profits
The Securities and Exchange Commission has amended its rules on short-swing dealings by officers and directors to make clear that profits made from certain merger and acquisition transactions are exempt from restrictions on insider profit-making. The SEC’s actions come in the wake of a court decision by the Philadelphia-based 3rd Circuit two years ago limiting […]
Posted inRegulatory Enforcement
A Q&A Approach To Investor Relations At Morningstar
Morningstar Inc. is taking an unconventional approach to investor relations by forgoing conference calls and meetings with analysts. Instead, the Chicago-based research firm is offering investors a chance to ask and have answered questions about the company in a monthly, public, question-and-answer session. The $179.7 million company, which completed an initial public offering in May, […]
Posted inBoards & Shareholders
Lessons From Disneyland: Bad Decisions Are Still Decisions
Less-than-ideal is not illegal. That’s the upshot of the decision rendered by Delaware Chancery Court Chief Judge William B. Chandler III, who found that Walt Disney chief executive officer Michael Eisner and the Disney board of directors properly exercised their fiduciary duty and did not commit waste when the company hired and then fired Michael […]
Posted inRegulatory Enforcement
Wendy’s Indemnification Pacts Atypical; Will They Matter?
There is little question that, since The Sarbanes-Oxley Act of 2002 was enacted, the issues of executive accountability, insurance and indemnification have garnered greater attention by directors and officers of public companies. Benowitz Companies have always had to concern themselves with liability issues, but, “that concern has been elevated since Enron and SOX,” notes Robert […]
Posted inRegulatory Enforcement
When The SEC Charges, Should You Fight Or Settle?
When the Securities and Exchange Commission recently filed enforcement actions against three former executives of i2 Technologies, one of them—former president and CEO Gregory Brady—fired off a press release vowing to “vigorously defend” against the lawsuit and prevail at trial. RELATED INSIGHTS The following related guest columns by SEC veterans were published in Compliance Week […]
Posted inBoards & Shareholders
Toys ‘R’ Yours: Court Defers To Board In Acquisition Bid
The Delaware Court of Chancery last month rejected an effort by shareholders of Toys “R” Us to thwart of an acquisition of the giant toy retailer—a decision that illustrates several key principals in the mergers and acquisitions field, including courts’ unwillingness to substitute their judgment for boards that deliberate carefully. Shareholders had filed suit against […]
Posted inRegulatory Enforcement
Case Highlights Use Of Deferred Prosecution Agreements
This month’s indictment of two former executives of Bristol-Myers Squibb highlights the government’s increasing use of “deferred prosecution agreements,” under which companies insulate themselves from criminal liability by agreeing to assist in the prosecution of employees. On the same day that federal prosecutors announced that they were pursuing ex-CFO Frederick Schiff and Richard Lane, who […]
Posted inRegulatory Enforcement
Mirant Lawsuit Could Make Southern Co. Liable For Debts
Mirant Corp. and its creditors committee have filed a lawsuit against its former parent, Southern Co., asserting, in effect, that the Atlanta-based holding company played a role in Mirant’s bankruptcy due to the way it structured the spin-off of Mirant in April 2001. The plaintiffs are seeking to recover at least $2 billion in connection […]
Posted inRegulatory Enforcement
Court: SOX May Give Life To ‘Late Filed’ Securities Suit
Asecurities fraud suit might be able to go forward under Sarbanes-Oxley even though it clearly would have been barred under the pre-SOX law, a federal appellate court has ruled. The decision could potentially open the courthouse doors to many securities lawsuits presumed dead. Several appellate courts have held in recent months that SOX—which expanded the […]
