A Warning to Foreign Companies Entering "Sensitive" U.S. Markets

by David Lee September 7 2006, 02:47
I. Introduction



While the United States generally pushes for more open access for its investors to foreign markets, the sight of foreign companies trying to invest in "sensitive" areas of the U.S. economy has drawn a very different reaction. Two recent acquisition attempts illustrate this point: CNOOC's, a Chinese oil and gas company, attempted acqusition of Unocal and Dubai Ports World's attempted takeover of security for a number of eastern and southern ports. [More]

O'Brien v. Ohio State University: Implications for Future Employment Agreements

by Krikor Meshefejian April 26 2006, 16:27
In 2004, Ohio State University officials announced that they were firing then-coach Jim O'Brien because of NCAA violations that allegedly breached O'Brien's contract with Ohio State. [1] O'Brien was the head coach for the men's basketball team, and was fired for loaning out $6,000 to a foreign player who the University was trying to recruit. [2] He then sued the University for a breach of their employment agreement. On February 15, 2006, Judge Joseph T. Clark of the Ohio Court of Claims ruled that O'Brien was unlawfully fired, despite the fact that he had indeed broken NCAA rules. [3] O'Brien had violated the terms of his contract, but the violations were not serious enough to warrant his firing. [4] This article evaluates the court's decision, and its implications on future contractual relationships between coaches and universities. [More]

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Sports

McMansions: Super-Sized Homes Cause a Super-Sized Backlash

by Alicia Filter April 20 2006, 15:54
"McMansions", also known as "garage mahals", "starter castles", and "Hummer houses" are all synonymous for the latest phenomenon in home building that has communities across the country banging down the doors of local City Councils to enjoin builders from destroying the character of their neighborhoods. The debate concerns interests of property owners who want to be able to use their own land as they see fit versus the interests of community members who want to maintain a uniform neighborhood appearance and not have a huge eyesore on their block, literally casting a shadow onto their humble, and often historic, homes. There is a wide range of issues at play in these communities, including constitutional rights, zoning issues, and even energy and water concerns. Though McMansions are causing a stir throughout the U.S., the solution is left to the 40,000 local governments across the country who will ultimately determine whether to eliminate Super-Size from the menu of housing permits, or to allow the expansion to continue. [1] [More]

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Real Estate

Insider Trading Scandal at Goldman and Merrill

by Mark Cassidy April 19 2006, 23:47
Prosecutors recently charged three employees at Goldman Sachs and Merrill Lynch with participating in a $6.7 million insider trading scheme. [1]  Authorities claim that Stanislav Shpigelman, an analyst at Merrill, sold inside information on upcoming mergers and acquisitions to Eugene Plotkin, an associate at Goldman, and David Pajcin, a former Goldman analyst. [2]  Plotkin and Pajcin then used this information to buy stocks before the public announcement of the deals and then sell them after the announcements for a significant profit. [3] The trio also recruited two employees of a printing plant in Wisconsin that publishes Business Week. [4]  The plant employees stole advance copies of the magazine and informed Plotkin and Pajcin of companies mentioned favorably in the “Inside Wall Street” column. [5]  As a favorable mention in the column usually leads to an increase in the price of those stocks, the conspirators were able to purchase the stocks prior to publication and then sell them for a profit. [6] Authorities became aware of the conspiracy when Pacjin’s aunt, Sonja Anticevic, a retired seamstress in Croatia, made more than $2 million on a two day investment in Reebok after the company announced its acquisition by Adidas. [7]  The SEC’s market surveillance department’s suspicion was aroused by of the unusually large number of options Ms. Anticevic had purchased prior to the announcement of the Reebok deal. [8]  Subsequent investigations led to her nephew David Pajcin who is cooperating with authorities against Shpigelman and Plotkin. [9] Both Goldman and Merrill have cooperated with authorities and warned their staffs about unethical behavior. [10]  Even though prosecutors have not charged either firm with complicity in the scheme, the fall-out for Merrill could be costly. [11]  Companies who had their information leaked by Shpigelman may decline to do business with Merrill in the future and the conspiracy may have compromised deals currently in development.  Going forward, Merrill will have to take additional measures to ensure security if it does not want to lose clients. This case is indicative of the security problems faced by businesses that handle sensitive and confidential information.  No matter what measures a business takes to prevent unethical behavior, employees still may engage in fraud; the fall out from which can greatly damage the business’ reputation and cost significant amounts of money. [1] Stephanie Kirchgaessner, Goldman and Merrill Staff Charged With Insider Trading, FT.com, Apr. 12, 2006, http://news.ft.com/cms/s/eb584f68-c96d-11da-94ca-0000779e2340.html [2] Id. See also, Jenny Anderson, Wall Street Employees Charged With Insider Trading, nytimes.com, Apr. 12, 2006, http://www.nytimes.com/2006/04/12/business/12inside.html?_r=1&ei=5087%0A&en=d2b225ef2b0b1434&ex=1145073600&adxnnl=1&adxnnlx=1145074314-IHXk5RHvgJ8TDzfq5UQ8vw&oref=slogin [3] Kirchgaessner, Supra, Note 1. [4] Anderson, Supra, Note 3. [5] Id. [6] Id. [7] Id. [8] Id. [9] Id. [10] James Polti, Merrill Lynch Warns Staff on Ethical Behavior, FT.com, Apr. 12, 2006, http://news.ft.com/cms/s/c55f148c-ca43-11da-852f-0000779e2340.html [11] Anderson, Supra, Note 3.

NAACP Ready to Fight IRS Claim of Improper Political Campaign Intervention

by Lucy Kalnes April 15 2006, 02:21
I. Introduction



"The NAACP has always been nonpartisan, but that doesn't mean we're noncritical. For as long as we've existed, whether Democrats of Republicans have occupied the White House, we've spoken truth to power."[1] With these words, Chairman Julian Bond, head of the National Organization for the Advancement of Colored People (NAACP), began the keynote address of the organization's 95th annual convention in Philadelphia in July of 2004. He went on: "We must guarantee the irregularities, suppression, nullification and outright theft of black votes that happened on election day 2000 never, ever happen again . . . You cannot win this race by ignoring race . . . We know that if whiles and nonwhites vote in the same percentages as they did in 2000, Bush will be re-defeated by 3 million votes."[2]

Soon after this speech was made, and its contents made publicly available on the official website for the NAACP, the IRS began an investigation claiming that the speech made by Bond in his capacity as Chairman constituted intervention in a political campaign, an activity prohibited for organizations operating as charitable under section 501(c)(3) of the Internal Revenue Code.[3][4] Intervention in a political campaign can carry with it a penalty as high as complete revocation of tax-exempt status. At the very least, a charitable organization which has intervened in a political campaign must pay an excise tax on the amount of money spent by the organization on the activity.[5] [More]

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Tax

The Guest Worker: Will he or she stay?

by Sabeen Malik April 13 2006, 01:47
I. Introduction



As of April 10, 2006, the Senate of the United States was still at an impasse regarding immigration reform in the United States. One of the most contentious topics within the immigration reform debate has been the idea of a guest worker program. The House bill that was passed in December had no mention of a guest worker program. Several versions of the Senate bill have contained varied schemes for a guest worker program. This article will look at the different versions of the Senate guest worker programs and the influence of big business in developing these schemes. [More]

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Labor

Is the Internet Replacing Real Estate Agents?

by Alicia Filter April 11 2006, 15:56
Before the Internet became popular, homebuyers had to spend days touring dozens of homes pre-selected by their real estate agent, and were often forced to settle on a home that was merely satisfactory. Now individuals can shop online for homes, take virtual tours of homes, and even list their homes for sale online without ever stepping foot inside an agent's office. The Internet provides what previously could only be provided by an agent: a direct connection between buyers and sellers, thus eliminating the need for a middleman that charges a pricey commission. In this age of technology though, some argue that the middleman can never be entirely replaced by the Internet. [More]

Can Congress Save the PBGC? Implications of a Delphi Corp. Distress Termination of Pension and Benefits Plans in Bankruptcy

by Jillian McClelland April 11 2006, 00:14
The negotiation efforts of Delphi Corp.'s union employees took on new urgency on March 31 as Delphi filed a motion with the U.S. Bankruptcy Court seeking to reject its collective bargaining agreements and modify its retiree benefits plans under sections 1113 and 1114 of the Bankruptcy Code. [1] If Delphi's pension and benefits obligations are ultimately rejected and then terminated, it will have a profound effect on the Pension Benefit Guaranty Corp., the federal agency that insures pension obligations. Already operating at a deficit, PBGC can ill-afford to take on any of Delphi's estimated $10.7 billion in under-funded liability for hourly employees' retirement benefits. [2] In response to the recent distress terminations of pension plans in the steel and airline industries, Congress has introduced several measure to bolster the PBGC. As a consequence, Chapter 11 debtors may find it more difficult to avoid pension liability as part of a reorganization plan. [More]

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Bankruptcy

Spring Cleaning: Throwing Out Cases About Throwing Out the Trash

by Jessica Panza April 3 2006, 23:51
Spring is a time for getting rid of things that are outdated, have served their purpose or are just plain wrong. However, sometimes when companies do a little spring cleaning they can get in a lot of trouble. Obstruction of justice is a serious crime and one that the government has pursued vigorously in recent years. One such case started five years ago when the SEC began an investigation of Credit Suisse First Boston (CSFB) which led to charges of obstruction of justice against CSFB investment banker Frank Quattrone. [1] Last year a jury found Quattrone guilty of the charges and he was sentenced to 18 months in prison. [2] However, on March 20, 2006 the 2nd Circuit did a little spring cleaning of its own by vacating the verdict. [3] Now the question is whether the government will let this case stay in the trash or if they will drag it back to court for the third time. [More]

Tags:

Corporate

FDIC Increases Deposit Insurance For Retirement Accounts

by Mark Cassidy March 29 2006, 23:47
On April 1st the Federal Deposit Insurance Corporation (“FDIC”) will increase its deposit insurance coverage of retirement accounts from $100,000 to $250,000. [1]  This change represents the first boost to coverage in over twenty-five years. [2]  Despite coverage for non-retirement accounts staying at the current level of $100,000, the increase in coverage for retirement accounts will be beneficial to consumers and banks alike. [3] The last increase in deposit insurance coverage took place in 1980 when it was raised from $40,000 to $100,000. [4]  However, many Americans now have much more than $100,000 in retirement savings.  [5]  This meant they were forced to bank at multiple institutions in order to have all of their retirement funds insured. [6]  Under the new law, individuals will be able to have up to $250,000 in retirement funds at one bank. [7]  This will make banking easier for consumers and increase profits for banks. Despite the caps, it is still possible to have all of one’s funds at a single institution and have them insured as retirement and non-retirement accounts are treated differently for insurance purposes. [8]  Retirement accounts, no matter which type, are added together and the total is insured up to $250,000. [9]  Non-retirement accounts are not totaled, rather each category of account is insured separately up to $100,000. [10]  For instance an individual may have a checking account, a joint account with their spouse, a retirement account, and trust account benefiting their spouse and child.  The checking account will be insured up to $100,000.  The joint account will be divided in half and each half treated separately. [11]  This means that a couple may have up to $200,000 in a joint account and it will still be insured as each spouse’s $100,000 share is insured separately. [12]  As noted above retirement accounts will now be insured up to $250,000. [13]  Trust accounts receive up to $100,000 of insurance protection per beneficiary, not depositor. [14]  Thus an individual could have a $200,000 trust naming his wife and child as beneficiaries and the full $200,000 would be insured. [15]  Under this system one could have $650,000 (or more if the trust has more than two beneficiaries) deposited at one institution and still have their funds insured by the FDIC. While the increase in coverage for retirement accounts has been welcomed, some feel that the FDIC should have also raised its coverage for regular accounts as the insurance cap of $100,000 does not account for the inflation of the past twenty-six years.  [16]  To keep place with inflation it is claimed that coverage on regular accounts should be raised to $235,000 or at least doubled. [17]  Additionally, the $100,000 insurance cap favors large banks over small ones as consumers are more willing to trust major banks with accounts that exceed the insurance cap and leave some funds uninsured. [18] While it is not a panacea, the increase in FDIC deposit insurance coverage for retirement accounts is a change that should be welcomed by all Americans.  Consumers will now be able to have fewer accounts resulting in fewer hassles and fewer bank fees, while banks will be able to handle the entire retirement savings of individuals rather than only receiving a share. [1] Laura Bruce, Deposit Insurance Reform: What it Means to Consumers, Yahoo, March 16, 2006, http://biz.yahoo.com/brn/060316/18251.html?.v=1 [2] PR-29-2006, FDIC Insurance for Retirement Accounts Increased to $250,000 Higher Coverage Takes Effect April 1; Basic Insurance Limit for Other Accounts Stays at $100,000, March 14, 2006, http://www.fdic.gov/news//news/press/2006/pr06029.html [3] Bruce, Supra, Note 1. [4] Id. [5] FDIC Consumer News, Special Bulletin April 2006, What You Should Know About Higher FDIC Coverage for Retirement Accounts, http://www.fdic.gov/consumers/consumer/news/special/specialApril06.pdf [6] Id. [7] Id. [8] Id. [9] Id. [10] Id. [11] Id. [12] Id. [13] Id. [14] Id. [15] Id. [16] Bruce, Supra, Note 1. [17] Id. [18] Id.

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