The so-called “Thompson Memo,” is an internal Department of Justice memorandum specifying the circumstances under which business organizations will be criminally prosecuted. The document places a great deal of emphasis on an organization’s level of cooperation in the prosecutor’s decision whether or not to prosecute the firm. The memo’s onerous cooperation standards have been the
AOL Time Warner Derivative Litigation Settlement: More to It Than Meets the Eye?
On May 12, 2006, the United States District Court for the Southern District of New York preliminarily approved the settlement of the consolidated derivative litigation filed on behalf of AOL Time Warner against 25 of the company’s present and former directors and officers as well as other third party defendants. The various derivative lawsuits alledged
Options Backdating Probe Deepens
In the latest development in the evolving options backdating story, the May 19,2006 issue of the Wall Street Journal contains a report (via wsj.com, subscription required) that federal prosecutors have launched criminal probes of at least five companies involved in potential stock-option backdating abuses. The article reports that Caremark RX, SafeNet, Affiliated
FCPA: A 70’s Revival?
A venerable statute from the 1970’s is going through a 21st Century revival, and that is not good news for companies who are active in the global econonmy or for their directors, officers and employees.
The Foreign Corrupt Practices Act of 1977 (FCPA) is a federal law containing antibribery and accounting requirements. The antibribery provisions
Notes from Around the Web
Numbers Pressure: In an article in its May 2006 issue, CFO Magazine reports the results of a survey of finance executives. Among other things, the survey participants were asked:
Do you ever feel pressure from your superiors to use aggressive accounting techniques to make results appear more favorable?
11 percent of public company participants and
Earnings Guidance: Meet, Beat or Delete?
The classic statement on the pitfalls of providing optimistic earnings guidance appeared in Warren Buffett’s Letter to Shareholders in the 2000 Berkshire Hathaway Annual Report (only an excerpt is reproduced here, but the entire Letter warrants reading, especially in light of subsequent events):
The problem arising from lofty predictions is not just that they spread
Options Backdating Update
Well, it didn’t take long for my prediction in yesterday’s post — that we would be hearing more about options backdating — to be proven correct. Today’s Wall Street Journal has a front page article (via wsj.com, subscription required) reporting that United Health Group has warned that it may need to restate three years of
Options Backdating: This Year’s Model?
Every day seems to bring fresh media outrage on the topic of executive compensation. Yesteday, the New York Times ran this article questioning executives’ personal use of corporate aircraft. (See a useful discussion of this article on the CorporateCounsel.net blog).
Among the more interesting media analyses on the topic of executive compensation is the series
Varying Averages for 2005 Securities Class Action Settlements
Each of the various published studies of the 2005 securities class actions has its own average settlement amount for 2005 securities class action settlements. The Cornerstone study reported an average 2005 securities class action settlement of $28.5 million, not including the WorldCom settlement. The NERA study reported an average settlement of $24 million, not including