Ethics and Compliance Programs
November 01, 2004
Last month, we discussed the fact that a recurrent task facing managers of Ethics and Compliance programs is to make sure their programs are effective, and to demonstrate this effectiveness to both internal and external audiences. We reviewed internal constituencies, including integration with business processes; clear written standards and controls; effective training and communication; and regular monitoring and evaluation. This month, we focus on external constituencies.
The Little Transaction with Big Complex Issues
November 01, 2004
In January 2003, I received a call from the Chairman of the Board of a long-time client, Grand Toys International, Inc. He asked me to attend a negotiating session for a potential double acquisition by Grand that would fundamentally change this sleepy Nasdaq SmallCap-listed company. I sensed that that this would not be a small undertaking. But I never imagined that the transaction, even after one of the two acquisitions were abandoned, would take nearly 19 months to complete and would involve re-domesticating Grand offshore; dealing with complex proposed tax legislation targeted at preventing large, U.S.-based multinational corporations from avoiding U.S. income taxation; maintaining Grand's Nasdaq listing; and preparing a complex registration statement.
New Tax Requirements for Nonqualified Deferred Compensation
November 01, 2004
The implementation of nonqualified deferred compensation arrangements providing for distributions upon certain types of arguably foreseeable "hardships" (<i>eg</i>, to pay for college) or in return for a "haircut" forfeiture, cut against the notion that the revenue deferral effect on the government is outweighed by the benefit of permitting the accumulation of additional retirement funds, as these arrangements provide benefits which may not be used for purposes of retirement. The American Jobs Creation Act (the "Act") was passed by the House of Representatives on Oct. 7, 2004, and received final approval from the Senate on Oct. 11, 2004. President Bush is now expected to sign the Act into law before the end of 2004. The Act enumerates an array of requirements intended to curb perceived abuses in the realm of executive compensation. In many ways, the thrust of the new requirements is to conform a number of aspects of the operation of nonqualified deferred compensation arrangements to those applicable to tax-qualified "401(k)" plans. Consequently, to be tax-effective under the new requirements of the Act, deferred compensation arrangements will need to operate in a fashion more akin to true retirement arrangements.
Jury Selection and Media Access
November 01, 2004
For laypersons and lawyers alike, the trial of Martha Stewart last winter was irresistible legal theater. But if, between all the discussions of Ms. Stewart's courtroom attire and lunchtime dining habits, you missed seeing how the district court and Second Circuit wrestled with the issue of media access to jury selection, you may want to give <i>ABC, Inc. v. Stewart</i>, 360 F.3d 90 (2d Cir. 2004) a read.
Document Destruction Horror Stories
November 01, 2004
Three recent cases involving government inquiries provide sobering lessons about electronic evidence to corporations and their lawyers. The most notorious, <i>U.S. v. Arthur Andersen, LLP</i>, resulted in criminal convictions. Another, <i>In the Matter of Banc of America Securities LLC</i>, involved SEC enforcement action. The third, <i>United States v. Philip Morris</i>, arose in a Department of Justice civil suit. If nothing else, the cases demonstrate that corporations exposed to such investigations must implement effective and well-maintained information management systems.
In The Courts
November 01, 2004
Recent rulings of importance to you and your practice.
Disclosing Client Confidences - An Update
November 01, 2004
In the February 2003 edition of this Bulletin, I commented on the then recently issued "final" Sarbanes-Oxley (SOX) Rules on Standards of Professional Conduct for Attorneys. The "final" rules were not in fact final, because the SEC both had sought additional comments on the rules and had proposed, and sought comments on, a modified form of its controversial proposed "noisy withdrawal" rules. Since then, there has been no further word from the SEC about when and how a lawyer for a company or business executive is required or permitted to report client misconduct to a third party, including regulators and law enforcement authorities. But that does not mean all has been quiet. Significant changes have been made by the ABA to the Model Rules of Professional Conduct in this area and by international organizations wrestling with the role of lawyers in anti-money laundering compliance efforts.
Cases Of Note
November 01, 2004
Recent cases of interest in the Internet industry.
NY Federal Court Sends 'Typosquatter' To Prison
November 01, 2004
Several months ago, U.S. District Judge Michael Mukasey of the Southern District of New York sentenced one of the most notorious "typosquatters," John Zuccarini, to two and a half years for violating the Truth in Domain Names Act, which was enacted by Congress last year. <br>Although his arrest and conviction remain the most significant actions taken under the statute, the Domain Names Act adds another possible step that can assist companies that are victimized by typosquatting on the Internet.
