Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

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Monday, June 2, 2008

Dow Chemical and Former Employees Settle Litigation Over Unauthorized Discussions

Dow Chemical, J. Pedro Reinhard and Romeo Kreinberg settled their litigation over the board's firing of the individuals because they engaged in unauthorized discussions about a LBO.  Reinhard and Kreinberg acknowledged participating in unauthorized discussions and acknowledged that the actions taken by Dow’s Board were appropriate under the circumstances.  In return, Dow Chemical acknowledged their substantial contributions over the years.

June 2, 2008 in News Stories | Permalink | Comments (0) | TrackBack (0)

Weiss Sentenced to 30 Months

Melvyn Weiss was sentenced today to 30 months in prison and ordered to pay $10 million in forfeitures and fines.  He pleaded guilty to a federal racketeering conspiracy, admitting that he entered into "secret payment arrangements" with individuals who served as lead plaintiffs in class actions; under the terms of the agreement, the maximum sentence was 33 months.  WSJ, Plaintiffs' Attorney Melvyn Weiss Is Sentenced to 30 Months in Prison.

June 2, 2008 in News Stories | Permalink | Comments (0) | TrackBack (0)

Court Sentences 4 Defendants in Insider Trading Rings

On May 22, 2008, the United States District Court for the Southern District of New York entered final consent judgments against defendants Eugene Plotkin ("Plotkin") and Jason C. Smith ("Smith"), and on May 29, 2008, entered final consent judgments against defendants Stanislav Shpigelman ("Shpigelman") and Elvis Santana ("Santana"), in an action filed in 2005 by the Commission, charging 17 defendants with collectively engaging in a widespread insider trading scheme, which netted almost $7 million in illicit gains, through trading in at least 26 stocks. The court ordered that each of the above-referenced defendants be enjoined from future violations of the federal securities laws. The court also ordered Shpigelman and Santana to pay disgorgement, but uUnder the terms of the settlements with Plotkin and Smith, the SEC did not request, and Judge Wood did not order, disgorgement against Plotkin and Smith because neither of them received any substantial ill-gotten gains from the charged conduct. The SEC also did not request penalties against Shpigelman, Plotkin and Smith based upon their prison sentences in parallel criminal proceedings. Under the terms of the settlement with Santana, the Commission did not request, and Judge Wood did not order, penalties against Santana based upon the sworn statements in his statement of financial condition.

The SEC alleged that Plotkin, along with co-defendant David Pajcin, orchestrated three separate insider trading schemes based upon trading in material non-public information stemming from Merrill Lynch (the "Merrill Lynch Scheme"), Business Week magazine (the "Business Week Scheme") and grand jury proceedings in New Jersey concerning Bristol-Myers Squibb Co. (the "Grand Jury Scheme") (collectively, the "Schemes"). The Complaint alleged that Shpigelman leaked confidential non-public information in connection with the Merrill Lynch Scheme, and that Santana illegally traded in a number of securities on the basis of non-public information originating from Merrill Lynch and Business Week magazine.  The SEC also alleged that Smith leaked confidential non-public information in connection with the Grand Jury Scheme and also invested money in connection with the Schemes.

June 2, 2008 in SEC Action | Permalink | Comments (0) | TrackBack (0)

RiskMetrics Faces Shareholders' Complaints Over Governance

RiskMetrics, the parent of ISS Government Services, will hold its first shareholders meeting this week after going public earlier this year, and some shareholders complain that the company does not live up to its own corporate governance standards.  Specifically, Ethan Berman serves dual roles as CEO and Chairman, and the compensation for other executives takes into account a number of subjective factors, instead of objective performance measures.  WSJ, Turning the Tables: RiskMetrics's Head Faces His Day of Shareholder Judgment.

June 2, 2008 in News Stories | Permalink | Comments (0) | TrackBack (0)

Government and Milberg Firm Are Expected to Settle

The government and Milberg LLP are close to settling the government's prosecution of the firm for alleged kickbacks to plaintiffs in exchange for being named lead counsel in private class actions.  The settlement would include payment of penalties of around $75 million.  William Lerach, a former Milberg partner, is serving a two-year prison term, and Melvyn Weiss, a founder of the firm, has pleaded guilty and awaits sentencing.  WSJ, Class-Action Law Firm Close to a Settlement.

June 2, 2008 in News Stories | Permalink | Comments (0) | TrackBack (0)