Executive Compensation
It's no secret that for some time now, the Securities and Exchange Commission (SEC), institutional investors and shareholder services have all been dissatisfied with the opaqueness of required executive compensation disclosure in Proxy Statements under Item 402 of Regulation S-K. In fact, the SEC may soon consider revising the executive compensation disclosure rules, at least in respect of certain types of compensation disclosure that are viewed by critics of current disclosure compliance as particularly lacking in transparency and detail.
In The Courts
Recent rulings of importance to you and your practice.
The Unchanged Agenda
The call for improved corporate ethics has been thoroughly embraced by the worlds of business and public policy -- so much so that the recent invalidation of the federal sentencing guidelines, which allowed corporations to mitigate their sentences, will not slow the campaign's momentum. Rather, the guidelines' new advisory status should focus companies more on the overriding need to build an ethical culture, and less on rote, process-oriented compliance. This change in focus will underscore the guidelines' core strength: They are more than just legal procedure -- they articulate best practices in business ethics, which companies can put to constructive use.
Evasion of Foreign Tax Can Be Mail Fraud
The Supreme Court has decided that the Federal mail and wire fraud statutes can be used in prosecutions involving schemes to defraud a foreign government of tax revenue. The April 26 decision, written by Justice Thomas, expansively interpreted the words of 18 U.S.C. '' 1341 and 1343 and narrowly interpreted the common law "revenue rule," which some courts had viewed as limiting the reach of these statutes in cases involving foreign tax evasion. <i>Pasquantino v. United States</i>, 125 S.Ct. 1766 (2005).
Supreme Court Overturns Arthur Andersen Conviction
The ruling was swift and unanimous. On May 31, 2005, the Supreme Court reversed the conviction of the late accounting firm, Arthur Andersen LLP (Andersen), under the federal witness tampering statute, 18 U.S.C. ' 1512(b)(2), in a key case arising from one of the most significant corporate scandals in American history. <i>Arthur Andersen LLP v. United States</i>, 544 U.S. -- (2005) (full text of the opinion can be downloaded at www.supremecourtus. gov/opinions/04pdf/04-368.pdf). The result was unsurprising given the antagonistic questions the Justices posed to the government at oral argument. The Court overturned Andersen's conviction on the narrow grounds that the jury instructions failed to convey properly the elements of a crime under ' 1512(b)(2), and remanded for a possible new trial. The decision clarified the limits of ' 1512(b)(2) while leaving at least one important question unresolved. Perhaps more importantly, it may force a more narrow reading of the Sarbanes-Oxley Act with respect to document retention.
Hotline
PCAOB Issues Guidance on Audits of Internal ControlThe Public Company Accounting Oversight Board has published additional guidance to auditors on how to…
Contingency Fees: A New Option For Complex Business Litigation
For many years, there have been qualified attorneys performing contingent fee services in securities class actions, consumer class actions, toxic tort and personal injury cases. But, historically at least, the contingent fee approach has not been a viable option for complex business cases. Why has this been the case? There seem to be three key reasons: Supply, demand, and tradition.
Time To Check Your D&O Coverage
It has become clear that not all D&O insurance coverages are created equal. And, in many instances, your policy may not provide the coverage that you count on. Clearly, in recent years, liability exposure for corporate directors has significantly increased. The erosion of protection not only for outside directors but also directors and officers generally, is a direct result of the corporate scandals that have erupted over the last several years, in one case creating the largest corporate bankruptcy in history, all due in large measure to fraudulent activity on the part of some.
