Tuesday, November 27, 2007
Thanksgiving was not so good for Genesco. Genesco yesterday announced that last Wednesday it had received a subpoena from the Office of the U.S. Attorney for the Southern District of New York for documents relating to Genesco's negotiations and merger agreement with The Finish Line. According to Genesco, "[t]he subpoena states that the documents are sought in connection with alleged violations of federal fraud statutes." The always timely White Collar Crime Prof Blog has much to say on this tactic including the following:
A grand jury subpoena as a litigation tactic? The legal battles over M&A deals can be rather contentious, to say the least, and getting the upper-hand on an opponent as leverage for a settlement is common. A grand jury investigation is something else altogether, though, because once started it takes on a life of its own, and the parties cannot terminate it as part of a global settlement of their claims. It would be more than a bit scary if a U.S. Attorney's Office did the bidding of one side of a corporate deal, and one would at least hope that the prosecutors were shown something to indicate that this is more than the usual overheated rhetoric that accompanies most corporate litigation -- where everyone claims to want their day in court and no one ever seems to end up there. Whether there's anything more than smoke here remains to be seen. But look for references to Genesco's press release to appear in the next filing by Finish Line and UBS in the civil litigation.
Read the full post here. This case is rising to a boil as we head into the Tennessee trial on Dec. 11. Genesco also filed yesterday a motion to clarify the scope of the hearing (download it here). They are claiming that the hearing should exclude consideration of Finish Line's fraud claims and encompass only the MAC claims. I'll have commentary on that development tomorrow. Hoping to see you in Nashville. . . .