January 20, 2007
NASAA to Announce Pro-Investor Agenda
NASAA announced it would hold a news conference setting forth its Pro-Investor Agenda for the 110th Congress on Jan. 25. NASAA To Unveil Pro-Investor Legislative Agenda for 110th Congress As described on its website: NASAA’s legislative agenda will include a focus on the regulatory structure of capital markets, the securities arbitration system, hedge funds and pension protection, as well as other issues of concern to state securities regulators and investors.
Business Round Table Op-Ed on Shareholder Access to Directors' Election
In anticipation of the SEC's reconsideration of a proposed rule to allow shareholders to nominate directors in certain circumstances, the President of Round Table has an op-ed in today's WSJ, arguing that shareholder democracy doesn't work in corporations. See Market Risk.
Options Scandal Won't Go Away
In the latest development, WSJ reports that many companies are making payments to executives to compensate them for the lost value resulting from backdated options that were repriced to reflect actual date of issuance. See Executives Get Bonuses As Firms Reprice Options.
Citigroup to Focus on Investment Bank
The big investment banks have announced huge profits in recent weeks, so it is not surprising that Citigroup announces it will focus on this business. See WSJ,Citigroup to Focus on Investment Bank
GE Will Restate Earnings Again
GE reported that it will restate earnings for the second time in two years because of its accounting for derivative transactions. See WSJ, GE Report Raises Doubts
Apple Says the Accountants Made Them Do It
Apple blamed GAAP rules for its $1.99 charge to customers to download certain enhancements. Nonsense, say the experts. SeeWSJ, Apple Gets a Bruise by Blaming A $1.99 Fee on Accounting Rules
Home Depot may face proxy fight
Today's WSJ reports that Home Depot is meeting with activist investor Ralph V. Whitworth, who has threatened a proxy fight if the company does not reassess its business strategy. See Home Depot Directors To Visit Activist Investor
January 19, 2007
Percentage of Customers' Wins in NASD Securities Arbitration Down Again
The 2005 statistics show that a customer "wins" (i.e., the customer recovers something) 43% of the time in NASD securities arbitration. This continues a downward trend since the 2001 high of 54%. Results of Customer Claimant Arbitration Award Cases
Fred Alger Settle SEC Market-Timing and Late Trading Charges
The SEC announced that Fred Alger Management and Fred Alger & Co. will pay $40 million to settle charges that the companies allowed market timing and late trading in the Alger Fund, $30 million in disgorgement and $10 million in a penalty. All the funds will be used to compensate investors. See IN THE MATTER OF FRED ALGER MANAGEMENT, INC. AND FRED ALGER & COMPANY,INCORPORATED (01/1/07)
Former SEC Member Runs a Hedge Fund
Today's NY Times discusses the new career of former SEC Member Richard Breeden and monitor of several high-profile distressed companies (including WorldCom)-- as a hedge fund manager. The fund has taken a stake in Applebee's and is seeking to elect its nominees to the board. See From Ethics Overseer to Hedge Fund Boss.
Comodity Funds' Heavy Concentration in Agriculture
The NT Times calls it:Wall Street Is Betting on the Farm and reports on a CFTC report that shows commodity funds' heavy concentration in future contracts for wheat, corn, and cattle. An analyst calls the numbers "jaw-dropping."
Efforts for Global Exchanges
Today's WSJ reports on the London Stock Exchange's efforts to fight off the bid from Nasdaq and other moves around the world to combine exchanges globally. See Exchanges Step Up Chase for Foreign Mates
January 18, 2007
Another Court Finds No Private Cause of Action under SOX 304
A federal district court in the Northern District of Ohio agreed with other district courts that find no private cause of action under SOX 304, which requires the CEO and the CFO to disgorge profits to the issuer when earnings are restated, and dismissed a derivative suit. While not surprising, it leaves one to wonder how this provision is to be enforced. In re Goodyear Tire & Rubber Co. Derivative Litigation.
Ohio Appellate Court Decision on Jurisdiction, Preemption
For those interested in state securities law, the Ohio appellate court recently (12/26/06) issued an opinion dealing with a private offering, purportedly under SEC Rule 506, that used a website to solicit offerees. The court held that (1) state did not have jurisdiction over certain defendants where the only contact with the state was a passive website; and (2) state regulation was not preempted simply because the offering was purportedly made under Rule 506. On the latter issue, the court declined to follow a federal court decision (Temple v. Gorman) to the contrary. See In re Blue Flame Energy Corp., 2006 WL 3775856(Oh. App. 12/26/06)
Large Philly Firm Alleged Assistance in Ponzi Scheme
For an article in today's WSJ alleging that Pepper Hamilton assisted a client in a Ponzi scheme, see Suit Alleges Big Law Firm Let a Ponzi Scheme Unfold