On June 27, 2006, U.S. District Judge Lewis Kaplan held, in the KPMG tax shelter prosecution, that portions of the Thompson memo violate the constitutional rights of 16 former KMPG partners who are accused of participating in a fraudulent tax scheme. Judge Kaplan found that KPMG, seeking to show full compliance with the Thompson memo
June 2006
Updates and Notes
By Kevin LaCroix on
Options Backdating Litigation Update: On June 19, 2006, the Kaplan Fox & Kilsheimer law firm initiated a new securities fraud class action lawsuit against Brooks Automation and several of its directors and officers, based on options backdating allegations. With the addition of the Brooks Automation lawsuit, the number of companies named in securities fraud class…
Options Backdating and D & O Insurance (and Other Notes from Around the Web)
By Kevin LaCroix on
Posted in D & O Insurance, Options Backdating
D & O insurers, concerned about lawsuits that have already have been filed and troubled by the possibility of an unknown number of lawsuits yet to come, have begun to respond to the options backdating investigation. On June 20, 2006, the Wall Street Journal (subscription required) carried an article entitled "Options Timing Raises Concern…
Another Variant on Options Backdating: Hiring-Related Stock Option Grants
By Kevin LaCroix on
Posted in Options Backdating
The recent media coverage surrounding stock option practices primarily has been focused on options backdating, and to a lesser extent on options springloading. A new wave of media attention has drawn scrutiny of another options compensation practice – the allegedly improper use of stock options grants in connection with hiring and recruiting of…
“Dozens” of Options Backdating Lawsuits Coming?
By Kevin LaCroix on
Posted in Options Backdating
Earlier this week several publications carried reports that pension funds in the United States, Europe and Australia had retained the Lerach Coughlin law firm to sue “dozens of companies” over the timing of stock options grants to their top executives. A June 13, 2006 article in the San Jose Mercury quoted Lerach Coughlin partner Darren…
First Options Backdating; Now Options Springloading?
By Kevin LaCroix on
Posted in Options Backdating
In the last couple of months, there has been widespread media coverage (including several prior posts on The D & O Diary) discussing the growing investigation into options backdating. New allegations have surfaced that may evidence options “springloading.”
Options backdating involves retroactively dating the grant and exercise price of an options issue to a…
Weak Signal, Dropped Call: The Vonage IPO Securities Litigation
By Kevin LaCroix on
Posted in Securities Litigation
Vonage Holdings Corp.’s May 24, 2006 IPO raised hundreds of millions of dollars of capital. It has also generated extensive negative press, as exemplified by the June 3, 2006 front-page article (subscription required) in the Wall Street Journal entitled “How Vonage’s IPO Stumbled.” To add injury to insult, the company, several of its directors and…
Notes from Around the Web
By Kevin LaCroix on
Posted in Enron, Fair Labor Standards Act
FLSA "Explosion": The June 5, 2006 issue of the Wall Street Journal has an article (subscription required) commenting on the "explosion" in cases under the Fair Labor Standards Act (FLSA). The article also contains statistics showing the number of FLSA actions increased four-fold between 2000 and 2005. EPL insurers have been struggling to find the…
The Sarbanes-Oxley Whistleblower Provisions: Unfolding Ramifications
By Kevin LaCroix on
Posted in SOX Whistleblower
Now that we have the criminal verdicts in the Enron criminal trial, it may be time to check in on one of the key legal reforms to arise from the Enron scandal. Among the key provisions that Congress included in the Sarbanes-Oxley Act was the so-called whistleblower provision, a tribute to the role of whistleblower…