Along with the burgeoning growth of the hedge fund industry has come the increasing importance and influence of activist hedge funds. This activism has taken a variety of forms, from public pressure on portfolio companies to change business strategy, to the running of a proxy contest to gain seats on the boards of directors of
SEC Commissioner: Potential Outside Director Liability for Options Backdating?
In an August 15, 2006 speech entitled “How to be an Effective Board Member” (here), SEC Commissioner Roel Campos made a number of interesting comments about the potential liability of corporate board members, and for that reason the entire speech merits reading. Of particular interest to The D & O Diary are Commissioner
Another Perspective on KPMG and the Thompson Memo
It is always rewarding to The D & O Diary when a blog post provokes a thoughtful and interesting response. The D & O Diary’s August 14, 2006 post about the Thompson Memo provoked a substantial response that is sufficiently interesting that we asked for and received the author’s consent to reproduce the response in
Thompson Memo Criticism Builds
As noted in this prior D & O Diary post, at least one U.S. District Court has found the Thompson Memo unconstitutional. At its recent annual convention, the American Bar Association adopted a Report issued by its Task Force on Attorney-Client Privilege. The Report urges the Department of Justice to withdraw or revise a
Brocade Communications Settles Shareholders’ Derivative Lawsuit Concerning Options Backdating
According to August 10, 2006 press reports, Brocade Communications settled the derivative lawsuit that shareholders had filed in federal court in San Francisco in connection with Brocade’s options-award timing miscues, in exchange for an agreement to adopt certain therapeutic governance measures and the payment of $525,000 in legal fees. The settlement also involves contributions
FCPA, Options Backdating, and D & O Exposure
In this prior post, the D & O Diary noted the recent resurgence of the 70’s vintage statute, the Foreign Corrupt Practices Act. Recent developments in the Comverse Technology options timing investigation underscore the increasing importance of the FCPA, particularly as the options backdating scandal continues to unfold.
On August 9, 2006, the
Catching Up on Options Backdating
Molex Execs Repay Pay: In one of the more interesting (and speediest) resolutions by a company of options timing concerns, 12 executives of Molex, Inc. agreed to repay the company a total of $685,000 to cover gains they realized on misdated options. The executives also agreed to have the prices raised on their unexercised
Private Money and D & O Risk
The Wall Street Journal’s recent series on "Private Money" describes the "new financial order" arising from "the new rules of private equity game." According to the July 25, 2006 Journal article (subscription required) entitled "Cash Machine: In Today’s Buyouts, Payday is Never Far Away," the new power players are private financiers – hedge funds, buyout
SOX Consequences: London Is Calling and Companies Are “Going Dark”
As detailed in this prior D & O Diary post, the Sarbanes-Oxley Act has imposed enormous compliance burdens and expense on companies whose shares are traded on the U.S. securities exchanges. It is hardly surprising that, according to an August 8, 2006 Wall Street Journal article (subscription required), U.S. exchanges have lost ground in
More Notes About the Milberg Weiss Indictment and the Declining Number of Securities Lawsuits
An August 4, 2006 Reuters article provides numeric support for the proposition, advanced in this prior D & O Diary post, that the declining number of securities fraud lawsuits is a consequence of the Milberg Weiss indictment. The article states that the indictment is "having a big impact on [the firm’s] ability to bring