No Just Compensation, Just Representation?

by Karen Lee February 15 2007, 19:28
I. Introduction



To attain the office of the Chief Justice of the United States is to reach the culmination of a prestigious legal career in public service. It is a guaranteed opportunity to go down in the history books, to impact the world - some might even call it attaining "legal immortality." [1]



But if this is so, why is Judge Judy making more than 100 times Chief Justice Roberts' salary? Her $25 million annual salary [2] makes Roberts' newly inflated one of $212,000 [3] appear as laughable as some of the more ludicrous plaintiffs that walk into her made-for-TV courtroom. [More]

Climate Change in Corporate Approach to Global Warming

by Thomas Desplinter February 1 2007, 09:29
The winds have begun to shift in the debate over how the United States should approach the problem of climate change, and an unlikely champion for reform has begun to emerge. No longer relying on government alone to decide what direction to take, leaders of some of the largest corporations in America are beginning for the first time to publicly recognize that global warming is in fact taking place, and that human actions are a contributing factor. Consequently, there has been a recent push both for businesses to adopt cleaner technologies and for the federal government to pass legislation that would cap U.S. emissions levels with the goal of significantly reducing the country’s overall output of carbon dioxide. [More]

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Corporate

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Spring is a time for getting rid of things that are outdated, have served their purpose or are just plain wrong.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]

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Corporate

Out with the Old, In with the New: NYSE Group, Starting a New Tradition

by Jessica Panza March 6 2006, 23:54
March 7, 2006 will mark the end of a 213 year old tradition, but it will also be the start of new era. If all goes according to schedule, tomorrow the New York Stock Exchange (NYSE) will complete a merger with Archipelago Holdings Inc. (Arca). [1] The merger will create a new publicly held corporation, NYSE Group Inc. (stock symbol: NYX) making the NYSE a for-profit public company. [2] The merger has been a long time in the making and is not only significant for the Big Board, but is also a major milestone in the corporate world as once again new standards have been set. [3] The transaction will give the NYSE, already the world’s biggest exchange, high tech trading capabilities and 49% of the stock trading market. [4] [More]

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Corporate

Executives are Getting the Green and Shareholders are Seeing Red

by Jessica Panza February 13 2006, 23:57
The beginning of 2006 usually gives pause to look back on the past year and reflect. When CEOs look back on the past year their vision may be obscured by the stacks of cash that were bestowed upon them. It was reported last week that despite small stock gains and slowing growth executive pay continued to swell in 2005. [1] Always a hot topic, and often over 400 time the amount earned by rank-and-file employees at large companies, executive pay is on the top of many people’s watch lists for 2006.[2] This article will take a look at how some justify executive pay, what recourse shareholders have to stop executives being paid too much and the proposal the SEC has made regarding disclosure of executive compensation. [More]

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Corporate

Where Have All the CEOs Gone?

by Jessica Panza November 14 2005, 23:58
As the year comes to a close, 2005 will be marked as a leading year of Chief Executive Officer (CEO) turnover.[1] With 1,100 CEOs having already left this year, departures have already exceeded the previous high set in 2000 when the dot-com bubble burst.[2] The trend is a bit surprising as the economy and corporate profits have both been on an up swing this year. While it might be easy to attribute the exodus rate to the impact to the pressures of compliance with Sarbanes-Oxley, there are other factors that seem to provide a better rationale for this year’s trend. [More]

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Corporate

D&O Insurance Coverage: What is it good for?

by Jessica Panza November 3 2005, 23:59
Corporate scandals over the past few years have been numerous and high-profile. As a result, the conduct of directors and officers of corporations have become subject to a high level of scrutiny. In addition to the public keeping a keener eye on the activities of corporations, the Sarbanes-Oxley Act of 2002 has increased the potential liability of directors and officers. [1] The Act, having established new fines and penalties for the corporate board, has had the incidental effects of causing the price of director and officers (D&O) liability insurance to rise dramatically and of creating a need for more sophisticated D&O insurance. While D&O coverage does exist, albeit it with higher deductible and limited coverage, a recent case demonstrates how directors may still bear the costs of litigation even with a policy. [2] [More]

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Corporate

Will Time Help?: SOX 404 Compliance

by Jessica Panza October 14 2005, 00:00
September 21, 2005 marked the first open meeting of the Securities & Exchange Commission (SEC) under its new Chairman Christopher Cox. More importantly, at that meeting the SEC approved a one year extension for compliance with Sarbanes Oxley (SOX) section 404 for non-accelerated filers. [1] The Commission also proposed creating new categories for large accelerated filers, who would be the only category subject to the initial phase-in period and would make it easier for some companies to move from accelerated to non-accelerated filer status. [2] [More]

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Corporate

Regulation FD: Siebel Fought the Law and Siebel Won

by Jessica Panza September 24 2005, 00:01
Five years after the Securities & Exchange Commission (SEC) passed Regulation FD (“Fair Disclosure”) a court finally had a chance to interpret its application.  On September 1, 2005 the United Stated District Court for the Southern District of New York dismissed the SEC’s claims against Siebel Systems, Inc. [1]  Regulation FD prohibits a company from disclosing information to analysts and investors that is non-public. [2]   Adopted in 2000, the regulation has often been criticized for being overly broad. However until Siebel no company challenged the regulation in court.   Regulation FD is based on the idea that no group should have advance access to information about a public company that may impact stock prices or that may influence trading.  Unsurprisingly, one of the regulation’s main purposes is to prevent insider trading.  In an effort to help companies comply Regulation FD considers information to become public by posting information on a company website,  making earnings calls open to anyone, or the filings of an 8-K. [3]  However, many companies have been wary of sharing information and some have even stopped giving earnings guidance as a result of the potential liability.  Some companies have even gone as far as to adopt Regulation FD disclosure policies which outline a procedure, with certain controls in place, for dissemination of company information.  This was not the first time Siebel has come under SEC scrutiny.  In 2002 the Siebel paid $250,000 to settle a alleged violation of regulation FD.  In that case the SEC claimed that selective disclosures were made at a Goldman, Sachs technology conference.  [4] Other companies that have dealt with the SEC enforcement actions under regulation FD and settled include Motorola, Raytheon and Secure Computing. [5]   In the present case the SEC alleges that Siebel violated Regulation FD by comments made by its CFO Goldman at private events in 2003 attended by investors.  Goldman made comments that the activity level of the company was “good” or “better” and noted that a few deals were in the works. [6] These statements are said to contrast the public statements made by CEO and Chairman Thomas Siebel earlier in the month.  [7] Furthermore, the complain states that the required 8-K filing disclosing the non-public information was not submitted. [8]  The court dismissed the case for failure to state a claim.  In its opinion the court noted that “the SEC has scrutinized, at an extremely heightened level, every particular word used … .” [9] Additionally, the court found that application of the Regulation in such an aggressive manner would not encourage the full disclosure of information. [10]   While this is the first court decision, it may not be the last.  The SEC has 60 days to decide if it will appeal to the Second Circuit located in New York. [11]  Especially since two questions raised by Siebel, if the SEC had authority to issue the regulation at all and if the regulation is overly broad, remain to be answered. In the meantime, what does this decision mean for companies?  First, it means that the SEC will likely be a little less aggressive in looking for violations.  But more importantly it gives a little guidance on hot to draft disclosures.  If the case is followed, the informational content, not the form will be the focus of Regulation FD violations.  Consequently those speaking on behalf of the company may have a bit more leeway then was originally thought.  Although Regulation FD still survives, hopefully after this case clearer guidance will be provided for the future.     [1] SEC v. Siebel Systems, Inc., ___F. Supp. 2d ___, 2005 Westlaw 2100269 (S.D.N.Y. Sept. 1, 2005). [2] 17 C.F.R. § 243.100 (2000).  [3] Id. [4] Floyd Norris, Market Place; S.E.C. Puts Data Disclosure in the Spotlight, N.Y. Times, Nov. 26, 2002 at C1. [5] Id. [6] SEC v. Siebel Systems, Inc., ___F. Supp. 2d ___, 2005 Westlaw 2100269 at  *1. [7] Id. at *2. [8] Id. at *3. [9] Id. at *8. [10] Id. at *11. [11] Stephen Labaton, Judge Dismisses Disclosure Suit Brought by S.E.C. Against Siebel, N.Y. Times, Sept. 2, 2005, at C9.

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