DHB Settles Class and Derivative Litigation for $40 Million

DHB Industries, Inc. (OTC: DHBT) has announced the settlement of both the securities class action and derivative suits pending in the United States District Court for the Eastern District of New York before Judge Joanna Seybert.

The class action will be settled for $34.9 million in cash, plus 3,184,713 shares of DHB common stock. The derivative action will be settled in consideration of DHB adopting certain corporate governance provisions and paying $300,000, as attorneys' fees and expenses to lead counsel in the derivative action.

According to this Reuters article, "the settlement also includes the removal of Chief Executive David Brooks and other executives from the company's board." It is not clear if these removals are the "corporate governance" changes that result from the settlement of the derivative action.

Brooks was placed on leave earlier this week and according to the Reuters article "is expected to help fund DHB's payments by exercising 3 million warrants. Additionally, DHB can require Brooks to purchase 3 million shares of its common stock to finance the remaining portion of the company's cash settlement."

Lead plaintiffs in the class action are RS Holdings, the NECA-IBEW Pension Trust Fund, and George Baciu. Co-Lead Counsel in the class action are Labaton Sucharow & Rudoff LLP and Lerach Coughlin Stoia Geller Rudman & Robbins LLP.

From a review of the docket, it appears that the settlement comes after the motions to dismiss were fully briefed, but before the Court had ruled on those motions.

DHB is a manufacturer of:

technically advanced bullet and projectile resistant garments, bullet resistant and fragmentation vests, bomb projectile blankets, and related ballistic accessories and technologies for the United States Military and Law Enforcement Agencies.

Wearing them instead of selling them might have been a good idea for Mr. Brooks, if you ask me.

ADDITION: An alert reader (is there any other type?) pointed out this article which dubs Mr. Brooks a "War Profiteer" and indicates that the bat mitzvah Mr. Brooks threw for his daughter in late 2005 cost an estimated $10 million. Flown in by private jet to perform for the affair - Aerosmith, Tom Petty, Don Henley and Joe Walsh, who performed with Fleetwood Mac's Stevie Nicks, Kenny G, 50 Cent, and Ciara. He apparently can afford it, having received more than $70 million in compensation in 2004 alone.

ADDITION: The 10b-5 Daily and the WSJ Law Blog have posts on the settlement, here and here, respectively.

Showdown at the Options Backdating Taskforce Corral

According to a post today from WSJ Law Blog, Proskauer Rose LLP has announced the creation of a "Stock Options Task Force." The "special, multi-disciplinary" group of lawyers will work with companies in all matters relating to stock option-related issues.

While it probably wouldn't qualify as a replacement for professional wrestling, now we have the makings of a showdown.

As noted here last month, the plaintiff-side firm of Kahn Gauthier Swick, LLC announced the creation of their own "Options Pricing Investigations Division."

As an aside, I had forgotten that the former "World Wrestling Federation" had been forced to change their name to "World Wrestling Entertainment" after losing an intellectual property case earlier this decade to the World Wildlife Fund.

ADDITION: The D&O Diary also has a post on this showdown.

Securities Litigation and Its Lawyers, Perfect Together

Professors Stephen J. Choi (New York University School of Law) and Robert B. Thompson (Vanderbilt University School of Law) have authored a paper Securities Litigation and Its Lawyers: Changes During the First Decade After PSLRA that contains a fairly interesting analysis of the post-PSLRA behavior of class action firms and their institutional investor clients.

Dividing the decade since the PSLRA went into effect, the article bisects the intervening years into two periods:

the immediate several years right after the enactment of the PSLRA, where law firm behavior likely reflected the need to find a plaintiff or group of plaintiff with the largest financial stake, likely outside the group of institutional investors who initially remained on the sidelines (the "initial" post-PSLRA period)

and

the years after the initial several years (2000 and beyond) where plaintiff law firm behavior reflected the need to respond to institutional investors as they came to play a greater role as lead plaintiffs (the "mature" post-PSLRA period).

In the former period, the authors found that so-called "top plaintiff law firms" (as determined by settlement values obtained in a sampling of pre- and post-PSLRA cases) were more likely to join together with lower ranked law firms compared with the pre-PSLRA period.

Their hypothesis:

First, the need to create a large group of lead plaintiffs (at least where institutional investors do not act as lead plaintiffs) may lead law firms to join with lower ranked law firms that bring specific lead plaintiffs to the group . . . Second, severe limits on discovery prior to the hearing on the motion to dismiss in the post-PSLRA period increased the importance of diversification as a motive in joining with other law firms. To the extent diversification simply requires other firms willing to help pay the costs of pursuing any particular litigation, we predict that an increased diversification motivation will lead to less discriminate pairing among plaintiffs law firms.

There is much more in this draft article, but it will have to wait for another day.

One last note, though. The article states:

There has been a substantial increase in participation of public pension firms, a group that includes well-known public employees' funds such as Calpers, NYCERS and funds related to various unions. At the same time, there has not been any substantial involvement by private investors, such as mutual funds, banks, and insurance companies.

This is the same fallacy that I have been on a quixotic quest to banish from the kingdom, as detailed in prior posts here, here, and here.

Listen up academia - Mutual funds can and do serve as lead plaintiffs in private securities litigation. You've been warned.

As an aside, Choi and Thompson provide a cogent analysis of one of the potential disincentives for private institutional investors to serve as lead plaintiffs, noting:

In a world where investment manager performance is regularly measured by relative returns, the possibility of competing managers' free riding on your efforts, or the comparative option of your free riding on other investors operates as a disincentive to participate as a lead investor.

Food for thought.

Apologies for the title to former New Jersey Governor Tom Kean.

Diversity Training

Late last month, Magistrate Judge Franklin Noel ordered counsel in the UnitedHealth Group Inc. (NYSE: UNH) derivative litigation to provide:

information concerning the minority and gender membership in your respective law firms, and on the proposed leadership team.

and:

a statement advising the Court of any legal-ethical issues raised concerning each individual attorney, and that attorney's law firm in the past ten years.

The AP has a story on the Judge Noel's order, here and The Volokh Conspiracy has a post here.

While a number of firms had filed motions seeking appointment as lead counsel, only two groups of firms filed a response to Judge Noel's order. They took slightly different tacks, though.

As an aside, neither response took issue with the use of the term "gender" as opposed to "sex" to describe the information the Court sought. There is a difference, as noted in Encyclopædia Britannica's definition of gender identity. Gender is:

an individual's self-conception as being male or female, as distinguished from actual biological sex. For most persons, gender identity and biological characteristics are the same. There are, however, circumstances in which an individual experiences little or no connection between sex and gender.

Back to the business at hand.

The firms of Chestnut & Cambronne, P.A. and Shapiro Haber & Urmy LLP comprise one group, and represent Jan Brandin, the first plaintiff to file a derivative complaint.

Having been given little guidance by Magistrate Noel as to how inclusive the response was to be, the response filed by Chestnut & Cambronne and Shapiro Haber & Urmy, categorized and specifically identified the attorneys working on the litigation in a number of ways, including their gender and sexual orientation.

The other group to file a response to Magistrate Noel's order, represents the "Pension Fund Group" and includes the firms of Bernstein Litowitz Berger & Grossmann LLP and Grant & Eisenhofer, P.A.

The Pension Fund Group's response included statistical information on all of the employees at both firms as well as a breakdown of the attorneys, noting the number and percentage of each group that "identify themselves as members of racial or ethnic groups commonly described as 'minorities' in the United States." While noting that certain attorneys at Bernstein Litowitz are openly homosexual, the Pension Fund Group's response did not specifically identify those attorneys.

Another interesting note.

Judge Noel's order also requested information on the "makeup of previous steering committees to which [the firms] have been assigned."

Both Bernstein Litowitz and Grant & Eisenhofer indicated in their response that they had not served in any capacity on a "steering committee," as they regularly serve only in the capacity of either lead or co-lead counsel.

For those lead plaintiff junkies out there (all three of you), the Pension Fund Group is composed of:

• St. Paul Teachers' Retirement Fund Association
• Public Employees' Retirement System of Ohio
• State Teachers' Retirement System of Ohio
• Public Employees' Retirement System of Mississippi
• Jacksonville Police & Fire Pension Fund
• Louisiana Municipal Police Employees' Retirement System
• Louisiana Sheriffs' Pension & Relief Fund
• Fire & Police Pension Association of Colorado
• The Connecticut Retirement Plans And Trust Funds

Note - The responses and Judge Noel's order are being hosted by FileDEN, a free hosting service - please let the author know if you have any trouble accessing those documents.

Sarbanes-Oxley For Dummies - Really!

While catching up on some long overdue reading, an article in the May 2006 issue of CFO Magazine alerted me to the availability of a laugh-out-loud book title, Sarbanes-Oxley For Dummies.

I was further delighted to see that it is the best selling Sarbanes-Oxley related book on Amazon.

The author, Jill Gilbert Welytok, is a CPA and a practicing attorney, and is the author of a host of other books, including the QuickBooks Bible and The Online Investing Bible.

And Welytok's Amazon profile lists another laugh-out-loud book as one of her favorites - Captain Underpants and the Wrath of the Wicked Wedgie Woman.

All joking aside, her Sarbanes-Oxley book has received excellent reviews at Amazon.

ADDITION - If you intend to buy this book (and I won't judge you), I urge you to visit Amazon through the following link:




This benefits, OBG Cocker Spaniel Rescue, an all-volunteer non-profit animal rescue organization based in Washington DC that is dedicated to the rescue, medical care, rehabilitation and placement by adoption of homeless and/or abandoned cocker spaniels and cocker spaniel mixes to good homes in the Mid-Atlantic region.

We adopted Norm, our 4 year-old cocker spaniel last July through OBG.

International Institutional Investor "Arms Race"

One of the newer trends in the securities class action arena is a rise in the profile of foreign plaintiffs in US litigation.

Adding to this trend is the increasing emphasis that plaintiff side firms have placed on solidifying their relationships with foreign institutional investors and outside counsel for those investors.

Earlier this year, Labaton Sucharow & Rudoff LLP issued a press release announcing a joint alliance with the TILP Group, a German based firm with offices in Europe and the Middle East that represents private and institutional investors in Germany, Austria, Ireland and Luxembourg. A related announcement by TILP is available here.

The European invasion is being led by Labaton partner Eric J. Belfi, a recent addition to the firm, according to this release.

Other firms certainly represent international clients in securities class actions in the United States, but none have so publicly indicated that they are working together with foreign attorneys to prosecute securities class actions.

For example, Bernstein Litowitz Berger & Grossmann LLP represents the Ontario Teachers' Pension Plan Board in The Williams Cos. securities litigation and the Nortel Corp. securities litigation.

Lerach Coughlin Stoia Geller Rudman & Robbins LLP provides a list on their website of foreign institutional investors they represent, including The London Pensions Fund Authority, and UniSuper - a fund dedicated "exclusively to all who work in Australia's higher education and research sector."

Schiffrin & Barroway, LLP makes their website available in 17 languages (well 15 and two Chinese versions, but I'm not counting) and dedicates a specific part of their website and firm brochure to foreign institutional investors.

Not to be outdone, Cohen, Milstein, Hausfeld & Toll, P.L.L.C. also has an international practice area portion of their website and boasts that they have "affiliated offices in the United Kingdom, Italy, South Africa, Panama, Australia and China." Sadly though, the "International Securities Case" page is "Coming Soon."

Cohen Milstein is also among the growing group of American class action firms that sponsor, speak at, and attend international pension fund summits such as the European Pension Investment Forum and the UK & Irish Pension Summit.

Hypercom Complaint Dismissed (Again)

Today, Hypercom announced the dismissal with prejudice of the Second Consolidated Amended Class Action Complaint filed against the company and its former Chief Financial Officer, John W. Smolak. The litigation was pending in the District of Arizona.

A copy of the second amended complaint is available here.

According to another release from the company, the prior complaint was dismissed with leave to amend, back on January 25, 2006.

Co-lead counsel are Schiffrin & Barroway, LLP and Cohen Milstein Hausfeld & Toll, P.L.L.C.

Yet Another Press Release Permutation

It appears that someone forgot to send the vigorous defense memo to Parlux Fragrances, Inc.

According to a press release issued by the Fort Lauderdale-based fragrance maker and distributor, the company was recently served with both a shareholder's class action complaint and a derivative complaint, both filed in the Circuit Court of the Seventeenth Judicial Circuit in and for Broward County, Florida. The derivative complaint was filed by the NECA-IBEW Pension Fund.

Both the derivative and class cases relate to a proposal, detailed in Parlux's June 14, 2006 Form 8-K, ) from the company's CEO, Ilia Lekach, to acquire all of the outstanding shares of common stock of Parlux. As noted here, this is not the first time that Lekach has attempted to take the company private.

Parlux's release goes on to state that:

Parlux and the other named defendants have engaged experienced Florida securities counsel and intend to respond to the Class Action and the Derivative Action in a timely manner, but Parlux believes that the Class Action and the Derivative Action are without merit.

Be that as it may, enquiring minds want to know if the defendants will mount a vigorous defense?

As an aside, it is with some sadness that I note, according to Wikipedia, the National Enquirer has dropped that famous catchphrase.

Merrill Lynch Settles Enron Bankruptcy Claims

According to press reports here (AP via Yahoo! Finance) and here (MarketWatch) Merrill Lynch & Co. will pay $29.5 million to settle claims asserted against it by Enron Corp. as part of the so-called MegaClaims litigation in the bankruptcy court.

In addition, Merrill Lynch agreed to drop approximately $74 million of claims that it had asserted in the bankruptcy proceeding against the Enron estate.

Merrill Lynch remains a defendant in the Enron securities class action, currently pending in the Southern District of Texas and set for trial on October 16, 2006.

Presenting the "Preemptive Vigorous Defense" Press Release

Readers have no doubt discerned that securities class action related press releases, in all of their permutations, present a great deal of fodder for my musings.

It appears a new permutation has emerged.

This morning Antigenics Inc. issued a preemptive vigorous defense press release.

The release noted that a purported class action complaint had been filed last week in the United States District Court for the District of New Mexico against the company and its chief executive officer, Garo H. Armen.

Antigenics went on to state:

The Company believes that the complaint is without merit and plans to vigorously defend against the litigation. The Company's policy is to not discuss pending litigation.

Here's the rub - a quick search of Yahoo! Finance, MarketWatch, TheStreet.com, The Motley Fool, reveals that no press release has yet been issued by the firm(s) that filed the complaint.

Of course, they still have some time to get around to it.

The PSLRA states that securities class action plaintiffs, within 20 days of filing a complaint, "shall cause to be published, in a widely circulated national business-oriented publication or wire service, a notice advising members of the purported plaintiff class." See 15 U.S.C. § §  77z-1(a)(3)(A)(i) (Securities Act of 1933), 78u-4(a)(3)(A)(i) (Securities Exchange Act of 1934).

One more thing - isn't issuing a preemptive press release arguably the very discussion of pending litigation that Antigenics indicates it does not do?

CIBC Settles Global Crossing Related Claims

According to news reports, the Canadian Imperial Bank of Commerce (CIBC), has agreed to settle claims asserted against it in the securities class action filed on behalf of Global Crossing Ltd. and Asia Global Crossing Ltd. shareholders, pending in the Southern District of New York.

While terms of the settlement have not yet been disclosed, sources indicated that the settlement is likely in the range of $20 million.

The lead plaintiffs in the Global Crossing litigation are the Public Employees' Retirement System of Ohio (OPERS) and the State Teachers' Retirement System of Ohio (STRS). Lead counsel is Grant & Eisenhofer P.A.

Remaining defendants include Goldman Sachs and Merrill Lynch, two of Global Crossing's underwriters.

More Securities Related Resources

The good folks at the Federal Judicial Center have a number of resources available that may be of use or interest to securities litigators. Two in particular are worth highlighting.

The first is a monograph, Federal Securities Law, authored by Prof. Thomas Lee Hazen. The text is meant as an introduction to the intricacies of the federal securities laws for federal judges.

Though it is a bit dated, having been published in 2003, it is nonetheless a good starting point for one looking for a broad overview of the federal securities laws - and the price (free!) is certainly right.

Prof. Hazen is the Cary C. Boshamer Distinguished Professor of Law at the University of North Carolina at Chapel Hill School of Law.

The second securities class action related resource from the FJC is the fourth edition of the Manual for Complex Litigation. The nearly 800 page tome is aimed at assisting federal trial judges in managing class and complex litigation. For those not wishing to download the entire manual, the table of contents here allows users to download smaller pieces. Though judicial officers are the intended audience, it is nonetheless a helpful resource used often by practitioners. Note that this is not the annotated version available from Thomson - West.

Refco Settlement Derby May Be Heating Up

According to this Dow Jones story (via CattleNetwork.com) a new potential defendant has emerged in the Refco securities class action - the law firm of Mayer, Brown, Rowe & Maw LLP.

That nugget was contained in papers filed last week by the Lead Plaintiffs in support of their motion to modify the PSLRA discovery stay. As noted in that brief, although Mayer Brown is not currently named as a defendant, the firm:

acknowledges that it is the "Law Firm" described in the Amended Complaint as being responsible for negotiating and documenting the fraudulent "loan" transactions that form the core of the fraud at Refco.

Indeed, lead plaintiffs note that as Refco's primary outside law firm for more than a decade, Mayer Brown:

was intimately familiar with Refco's operations and structure and - importantly - prepared some of the documents that lie at the heart of this case.

And:

Because documents from Mayer Brown will (as noted above) be pertinent regardless of Mayer Brown's status as a party or non-party to this action, Lead Plaintiffs simply state here that Mayer Brown's confidence that it is insulated from liability is, in a word, optimistic.

Sounds like Mayer Brown may be getting in line to join the Refco settlement derby.

As noted in this National Law Journal article from January, Mayer Brown is actually already involved in the litigation, having been named (along with partner Joseph P. Collins) as a defendant in at least one of the many cases consolidated with the class action, Teachers' Retirement System of Illinois v. Lee, No. 1:05-cv-10403. A copy of the Teachers' Retirement System complaint is available on the Lerach Coughlin website, here.

For those that were wondering, Cattle Network describes itself as "the premier website for any and all information needed in agri-business on a daily basis," with information "on everything from crop insurance to basis to employee benefits to foot rot to the daily boxed beef report." And no, I couldn't find the story on any other public website.

Is it the Bowtie?

Wilson Sonsini Goodrich & Rosati has long been considered one of the giants of the securities class action defense bar. Indeed according to the firm's website:

From 1999 to 2004, we have represented more issuers and have completely prevailed in more cases than any other law firm in the country.

Even with the departure of two prominent partners in the last four months, the firm still maintains a very active presence in the field, thanks in large measure to Boris Feldman.

Indeed, I believe Feldman is one of only two members of securities class action defense bar with their own eponymous website - www.borisfeldman.com, complete with a suitably stern picture of Boris with his trademark bowtie.


The other member of the defense bar with their own eponymous website - none other than Lyle Roberts, the author of The 10b-5 Daily and the owner of www.lyleroberts.com. Roberts and Feldman were, until recently, partners at Wilson Sonsini, and coincidentally, both are bowtie aficionados.

Roberts joined LeBoeuf, Lamb, Greene & MacRae LLP earlier this month. The firm's announcement can be found here.

Another recently-departed Wilson Sonsini securities litigation partner, Bruce Vanyo, does not have his own website. Vanyo left Wilson Sonsini in February of this year for Kirkland & Ellis, LLP. His stay there was cut short as a result of undiscovered client conflicts, according to this article from The Recorder. Vanyo joined Katten Muchin Rosenman LLP in March. According to uncorroborated sources, Vanyo does not wear bowties, except on formal occasions.

"Passive Voice Press Releases" and the "Vigorous Defense"

You've seen them discussed separately, but now we have them together. A complaint about a so-called "passive voice press release" and a vigorous defense proclamation by a defendant.

Passive voice press releases are those issued by law firms that have not yet filed a complaint. They typically announce that a securities class action "has been filed." This is distinguished from the active voice releases, which state things such as "[the firm] filed a complaint" or "[the firm] has filed a complaint."

The practice is most often pointed out by one of the firms that filed a complaint, not by the defendant corporation, as we have here.

Earlier this week, InfoSonics Corporation issued a press release, stating:

While at least seven law firms have publicly disseminated press releases over the past few days implying that they have filed lawsuits against InfoSonics Corporation, the Company's preliminary investigation has revealed that two lawsuits seeking class action status have been filed (by three of the firms that issued press releases this week). The remaining four law firms that implied in their press releases that they also filed lawsuits had not done so at the time of their releases and the Company has no knowledge that they have since filed actual lawsuits.

This is the classic passive voice press release issue, discussed by The 10b-5 Daily here and here and by Securities Litigation Watch here and here.

InfoSonics couldn't resist the lure of the vigorous defense language having read in these pages earlier in the week about a recent successful use of that phrase, and went on to state:

The Company believes its actions raised in the lawsuits were appropriate and intends to vigorously defend them.

Now if only we could find a passive voice press release that indicated the law firm intended to "vigorously pursue" the claims that they have not yet alleged.

More Resources from Weil Gotshal & Manges

Over at Securities Litigation Watch, Bruce Carton has pointed out a helpful resource, the 2005 Securities Litigation Survey, published by Weil, Gotshal & Manges.

Another useful resource is their bi-monthly Business & Securities Litigator. It is available online (with archives stretching back to 1999) or readers may subscribe by e-mailing the firm's webmaster.

The Supremes & SLUSA - Round II (Part II)

The Supreme Court has unanimously ruled to vacate and remand the Seventh Circuit's decision in Kircher v. Putnam Funds Trust, the second Securities Litigation Uniform Standards Act of 1998 (SLUSA) case to be heard by the Court this term.

In an opinion written by Justice David Souter, the Court, held that orders remanding cases that had been removed under SLUSA are non-appealable under 28 U. S. C. § 1447(d). Justice Scalia concurred in part and concurred in the judgment.

ADDITION: The 10b-5 Daily has an analysis of the Court's decision here.

"Vigorous Defense" Successful!

According to a press release issued today, Judge William C. Griesbach of the United States District Court of the Western District of Wisconsin has dismissed, in its entirety, the consolidated securities class action pending against Great Wolf Resorts, Inc., and certain of Great Wolf's officers as well as the underwriters of the company's 2004 initial public offering.

Back in November 2005, when the suit was first filed, a Great Wolf spokesperson stated:

We believe this suit has no merit, and we intend to vigorously defend it.

Readers may recall that both Bruce Carton and I have previously noted the uniform choice of the "vigorous defense" language in corporate press releases. This is the first instance that I can recall where the company's self-professed "vigorous defense" was successful. The wire services have been alerted and are now prepared for the avalanche of these releases that will surely follow.

Great Wolf is the largest owner, operator and developer in the United States of drive-to family resorts featuring indoor waterparks. You can find a resort near you here.

Lead counsel in the case was Schiffrin & Barroway, LLP.

Fighting Cousins?

Over at Securities Litigation Watch, Bruce Carton has a post about an article in The Recorder regarding litigation between counsel in the respective state and federal derivative actions involving Tenet Healthcare.

Counsel in the federal case are Cauley, Bowman, Carney & Williams, LLP. Counsel in the state case include Robbins Umeda & Fink, LLP.

Those two firms have some history. Let's try and untangle the relationship.

First a little background.

Back in the late 1990s, Paul J. Geller and Scott R. Shepherd were partners in what was then known as Shepherd & Geller, LLC. That firm now exists as Shepherd, Finkelman, Miller & Shah, LLC, a 13 attorney firm with offices in 5 states.

S. Gene Cauley and Paul Geller formed a partnership and that firm eventually became Cauley Geller Bowman & Coates, LLP.

The three name partners at Robbins Umeda & Fink were the San Diego office of Cauley Geller prior to 2002, when they left to form their own firm.

In 2003, Sam Rudman left what was then still Milberg Weiss Bershad Hynes & Lerach to join what became Cauley, Geller, Bowman, Coates & Rudman LLP.

We have to take a brief side trip at this point in our story. On May 1, 2004 Milberg Weiss Bershad Hynes & Lerach LLP officially split into Milberg Weiss Bershad & Schulman LLP and what was then known as Lerach Coughlin Stoia & Robbins LLP.

After that, on May 6, 2004, the Cauley Geller firm announced that it would split into two parts - Cauley Bowman Carney & Williams PLLC and Geller Rudman PLLC.

Then on July 1, 2004, Geller Rudman announced that it was merging with what was then Lerach Coughlin Stoia & Robbins LLP to form what is now Lerach Coughlin Stoia Geller Rudman & Robbins LLP.

Did you follow all of that?

Good, then you can play my new game - Six Degrees of Sam Rudman.

Williams Companies Settlement (Part III)

OK folks - This is really the last update.

As noted earlier, the related litigation on behalf of Williams Communications shareholders is still pending.

The class in that case was just certified on Monday by Judge Stephen P. Friot.

Co-lead counsel for the Williams Communications sub-class are Yourman Alexander & Parekh LLP and Milberg Weiss Bershad & Schulman LLP.

As noted previously, a copy of the amended complaint is available here and the opinions on the motions to dismiss are available here.

The lead plaintiff (and one of the class representatives) for the Williams Communications sub-class is Alex Meruelo. With the power of Google, I now know that Mr. Meruelo is the founder of La Pizza Loca, Inc., a fast food pizza restaurant with about 50 franchised and company owned restaurants throughout Southern California. According to Pizza Today Magazine, La Pizza Loca is the 61st largest pizza company in the United States.

Mr. Meruelo is also a member of the board of directors and chairman of the audit committee of Commercial Bank of California and a member of the board of William Lyon Homes one of the nation's largest homebuilders.

As though that was not enough, Mr. Meruelo is also the President and CEO of Meruelo Enterprises, a residential and commercial real estate concern and utility construction contractor, and the President and CEO of Cantamar Property Management.

Williams Companies Settlement (Part II)

Seems like everybody was right, sort of.

The litigation is being settled for $311 million. The company, officers and directors, and underwriters (or their insurers) are contributing $290 million and Williams' outside auditors, Ernst & Young, are contributing $21 million.

On August 28, 2004 the Court granted the motions of the Lead Plaintiffs and their counsel to withdraw. The Court then re-opened the lead plaintiff process and set a new deadline for filing lead plaintiff motions. Several parties filed new motions and on January 18, 2005, Chief Judge Sven Erik Holmes appointed the Ontario Teachers' Pension Plan Board and the Arkansas Teacher Retirement System as co-lead plaintiffs and Bernstein Litowitz Berger & Grossmann LLP as lead counsel.

My preliminary research indicates that the Williams settlements dwarf the size of other securities class action settlements in Oklahoma. The largest I have found to date was the $6.2 million settlement in 1997 relating to the demise of Skolnik's Inc., the franchisor of Skolnik's Bagel Bakery restaurants.

Further submissions from readers are, of course, welcome.

Williams Companies Agrees to Settle Class Actions

Houston - we have a disagreement.

According to press reports (Wash. Post), natural gas and pipeline company The Williams Companies, Inc. has agreed to settle the consolidated securities class action pending in the U.S. District Court for the Northern District of Oklahoma for $290 million. The company's press release is here.

According to the company's press release, related litigation on behalf of Williams Communications shareholders is still pending.

Co-lead counsel in that case appeared to be Yourman Alexander & Parekh LLP and Milberg Weiss Bershad & Schulman LLP. A copy of the amended complaint is available here and the opinions on the motions to dismiss are available here.

But according to this release, the litigation is being settled for $311 million. The second release indicates that the Ontario Teachers' Pension Plan Board and the Arkansas Teacher Retirement System are co-lead plaintiffs, and according to the firm's website, Bernstein Litowitz Berger & Grossmann LLP are lead counsel.

As if things were not murky enough, the complaint available on the Bernstein Litowitz website, here, lists HGK Asset Management, Teamsters Local 854 Pension Fund, Local 710 Pension Fund and Local 710 Health and Welfare Fund, and Gary Kosseff as lead plaintiffs and Schoengold Sporn Laitman and Lometti, Kirby McInerney & Squire, LLP, Futterman & Howard, and Murray, Frank & Sailer LLP as co-lead counsel and makes no mention of the Ontario Teachers' Pension Plan Board or the Arkansas Teacher Retirement System.

Looks like we have to dive into PACER to sort this one out. Stay tuned.

As an aside, The Ontario Teachers press release also notes:

This settlement represents the largest securities class action recovery in the history of Oklahoma.

Any guesses as to the second largest securities class action in Oklahoma state history?

Cockroaches?

Readers have no doubt noticed that this blog has not commented on the investigation and indictment of Milberg Weiss Bershad & Schulman LLP and name partners David J. Bershad and Steven G. Schulman. That was not merely a myopic oversight, but a reasoned decision.

But now, the gloves are off, and I am compelled to write about one of the more dismaying sideshows, the cheap shot comment.

In a recent article in Forbes magazine, John D. Lovi, the managing partner of Steptoe & Johnson's New York office, and a frequent opponent of Milberg Weiss, when asked if the indictment of the firm spelled the end of Milberg Weiss said:

They're like cockroaches; they're highly adaptable.

The second part of that statement I have no issue with. In fact, the entire comment may have been taken out of context, as Lovi goes on to state:

Unless this firm is destroyed by this investigation and this case, I think they will continue to be a dominant player in the field.

But it's the first part of his initial quote that I cannot stomach.

As noted by the New York State Bar Association's Guidelines on Civility in Litigation:

Lawyers should not use vulgar language or make demeaning characterizations of other persons.

And:

Lawyers should be mindful of the need to protect the image of the legal profession in the eyes of the public.

Similar language is contained in the New York State Bar Association's Code of Professional Responsibility, which state in Canon 7-37:

A lawyer should not make unfair or derogatory personal reference to opposing counsel.

I recognize that the guidelines are voluntary, but performing a Google search for lawyer jokes only reinforces the need to be mindful of civility in the profession.

Let's all agree that name-calling has no place in the profession, even if it is merely being used for illustrative purposes.

Time to get off of my soapbox and return you to your regularly scheduled blog.

Chambers USA Ranks Securities Litigation Firms

Chambers and Partners has released the 2006 Guide to America's Leading Lawyers for Business.

Of note, according to this press release, the law firm of Bernstein Litowitz Berger & Grossmann LLP, was given the top ranking in the field of plaintiff securities litigation. The firm's profile is available here. Partners Max W. Berger and John P. ("Sean") Coffey also received the top ranking in that field.

Does your country have an Enron yet?

First we had good old regular Enron.

Then we had Parmalat, which many began calling the "Enron of Italy."

Now we have Escala Group, Inc., which is now being called the "Enron of Spain." The Escala Group is the third-largest network of companies in the collectibles market, after Christie's and Sotheby's.

Isn't it time the rest of the world caught up and got their own Enron?

UPDATE: Alert readers have reminded us that competing for the title (presumably with Parmalat) for "Europe's Enron" are Royal Ahold (BusinessWeek article here) and Royal Dutch / Shell Transport n/k/a Royal Dutch Shell plc (Wharton article here).

Also, HIH Insurance Limited has been dubbed the "Enron of Australia" by the BBC, and Elan Corporation, plc, has been dubbed the "Enron of Ireland" notes Gibson Dunn & Crutcher's 2004 Annual Report.

Another reader pointed out that The South Sea Company has been called the "Enron of England." While the second article does indeed use that phrase, it is a bit of a stretch to include it on the list, as the company pre-deceased Enron by about 282 years.

How Many Former Prosecutors Do You Have?

Last week, Lerach Coughlin Stoia Geller Rudman & Robbins LLP announced that John J. Rice, a former Assistant U.S. Attorney had joined the firm. The announcement can be found here.

A review of the firm's biography reveals that Mr. Rice has a lot of company at Lerach Coughlin. The firm has a dozen former federal prosecutors as well as five former state or city prosecutors. For a firm with about 160 lawyers - that works out to a nice ration of 1 out of 10 attorneys being former prosecutors.

While it is not quite the 4 out of 5 dentists that would recommend Trident gum, it is certainly a large percentage for a firm of that size.

Several other attorneys with the firm, including name partners John J. Stoia, Jr. and Samuel H. Rudman, spent time with the United States Securities & Exchange Commission.

For those that just had to know, the dozen former federal prosecutors are:

1. X. Jay Alvarez
2. Patrick J. Coughlin
3. Michael J. Dowd
4. Daniel Drosman (also a former Manhattan ADA)
   
5. Jonah H. Goldstein
6. G. Paul Howes
7. Jeffrey W. Lawrence
8. John J. Rice
9. Scott Saham
10. Sanford Svetcov
    
11. Susan G. Taylor
    
12. David W. Mitchell

The five former state or city prosecutors are:

1. Randall J. Baron
2. Anne L. Box
3. Christopher M. Burke
4. Jonathan M. Stein
5. Shawn A. Williams
   

CalPERS appeals dismissal of NYSE suit

According to this article from BusinessWeek, co-lead plaintiffs, the California Public Employees' Retirement System (CalPERS) and Empire Programs, Inc. have appealed the dismissal of their claims against the NYSE last December by Judge Robert Sweet in the In re NYSE Specialists Securities Litigation. Judge Sweet's opinion is available here.

Judge Sweet had ruled that:

NYSE has absolute immunity with respect to Plaintiffs' Section 6(b), Section 20(a), Section 10(b) fraudulent scheme, and state law fiduciary duty claims, all of which are based on NYSE's failure to adequately monitor the conduct of the Specialist Defendants.

According to the article, Plaintiffs are arguing on appeal:

The NYSE steps outside its legitimate regulatory capacity and function when it orchestrates a fraud on investors, and those investors have standing to sue for false statements misrepresenting the very market on which they were induced to trade.

CalPERS is represented in the litigation by Lerach Coughlin Stoia Geller Rudman & Robbins LLP while Empire Programs is represented by Lovell Stewart Halebian LLP.

As a result of the specialist scandal, all seven NYSE specialist firms were fined by the SEC. The exchange itself was also censured by the SEC over its failure to police the specialists. A number of individual former traders have been indicted on fraud charges stemming from the case and two have pleaded guilty.

One interesting sidenote to the litigation. One of the lead plaintiffs, Empire Programs, is currently involved in litigation with Sea Carriers, a now-defunct Connecticut-based trading company over payments to be made as a result of the nearly $250 million in disgorgement and civil penalties paid by the specialist firms to settle litigation with the SEC.

The SEC's Order Approving a Distribution Plan, available here, describes the Empire / Sea Carriers litigation at length.

Refco Settlement Derby Begins

And the horses are off...

Today, co-lead counsel in the Refco securities litigation, Bernstein Litowitz Berger & Grossmann LLP and Grant & Eisenhofer, P.A., announced a settlement with BAWAG P.S.K. Group for at least $108 million. A copy of the press release announcing the settlement can be found here.

The settlement was part of BAWAG's attempted global resolution of its potential REFCO related liability. BAWAG also apparently into settlements with the United States Attorney for the Southern District of New York and the Official Committee of Unsecured Creditors in the Refco bankruptcy proceedings.

The settlement with BAWAG comes incredibly early in the litigation - less than four months after lead plaintiffs were appointed and just two months after a consolidated complaint was filed. According to the release, " defendants had until July 10 to submit their motions to dismiss the case."

As mentioned last week by this author, co-lead counsel maintains a website devoted to case developments in the Refco litigation here. The prior post is available here.

The End Of The Mega Securities Case Website?

In recent years, securities litigation groupies have been able to follow developments in some of the major cases via websites set up by lead counsel. With the WorldCom litigation all but finalized and the Enron litigation substantially settled, it's time to find some new websites to satisfy the securities litigation hunger.

Here is a roundup of the case-specific websites:

WorldCom

The website created by Bernstein Litowitz Berger & Grossmann LLP and Barrack, Rodos & Bacine, co lead counsel in the In re WorldCom Inc., Securities Litigation, is perhaps the most inclusive securities class action case specific website ever created. The site contains copies of virtually every pleading filed by the lead plaintiff, New York State Common Retirement Fund, as well as copies of the vast majority of Judge Cote's opinions.

Enron

There are two Enron case-specific websites worth mentioning. The first, available here is updated by lead counsel, Lerach Coughlin Stoia Geller Rudman & Robbins LLP. The second, available here, is updated by the lead plaintiff, The Regents of the University of California. With a trial date looming in the Fall, my guess is that the settlements will keep piling in, and these sites will stay relatively static.

IPO

The website in the Initial Public Offering Securities Litigation has copies of many of the major briefs filed in the case, as well as copies of the amended complaints filed in each of the several hundred consolidated and coordinated cases.

Mutual Funds

The massive morass of cases that grew out of the late-trading and market-timing mutual fund scandals in 2004 does not appear to have a combined website maintained by any of the attorneys involved in the litigation. The Court has a website with opinions and certain other information here.

Merrill Lynch Analyst (Blodget)

Again, there does not appear to be a combined website maintained by any of the attorneys involved in the litigation. The Court has a website here with opinions and certain other information, though it is rather out of date. Note that these cases have been preliminarily settled, see Merrill Lynch's 8-K here.

Refco

Co-lead counsel, Bernstein Litowitz Berger & Grossmann LLP and Grant & Eisenhofer, P.A., maintain a website here, relating to the precipitous corporate meltdown of Refco, which before its implosion, was one of the world's largest providers of brokerage and clearing services in the international derivatives, currency and futures markets.

Odds and Ends

The other remaining mega-cases that easily spring to mind, Fannie Mae and Parmalat, do not appear to have their own websites, yet.

While the unfolding options-backdating scandal does not have a website yet, it probably soon will. According to a press release issued earlier this week:

Kahn Gauthier Swick, LLC ("KGS") announces the creation of the nation's first privately funded independent Options Pricing Investigations Division, focused on the investigation into the illegal backdating of options grants by US corporations. A growing number of companies are now being investigated by KGS' Options Pricing Investigations Division for improperly manipulating the prices of executive option grants.

Thanks to D&O Diary for pointing us to the release.

There are of course two other excellent sources of securities litigation related filings, Stanford Law School's Securities Class Action Clearinghouse, and an alternative site maintained by Lerach Coughlin Stoia Geller Rudman & Robbins LLP here. These clearinghouses were created by local rules in the Northern District of California, available here, which require the posting to a "Designated Internet Site" of virtually all pleadings filed in securities class action cases in that district.

If any readers are aware of case-specific websites (as opposed to case-specific pages that are part of a law firm's general website) that I have missed, please send them along and I'll update the list.

Press Releases as "Mini" Lead Plaintiff Motions

Earlier this month, I noted the emerging trend of lead plaintiff movants and their counsel issuing pre-emptive press releases.

The trend has taken a new turn. Yesterday, Dr. Jan Gilbert and his counsel, Kahn Gauthier Swick, LLC, issued this release regarding their intention to file a lead plaintiff motion in the Nature's Sunshine Products, Inc. securities litigation currently pending in the District of Utah.

The release notes:

Dr. Jan Gilbert is well suited to lead this litigation. As both a significant shareholder of the Company and a prominent member of the New York medical community and founder of the leading company devoted to nutrition for dental health and general health, Dr. Gilbert has both the interest and understanding to make an ideal Lead Plaintiff and class representative.

These types of assertions are similar to those often found in lead plaintiff motions regarding the adequacy of a proposed lead plaintiff.

As noted in the release, Dr. Gilbert is the founder of Oral Medicine Today, a dental and general nutrition health company. An affiliate of Oral Medicine Today is Superior Kosher Vitamins, a supplier of kosher certified nutritionals.

Fannie Mae - Settlement Near?

As reported today here (NY Times) and here (Washington Post), mortgage giant Fannie Mae has agreed to pay $400 million in civil penalties under an agreement with the Securities and Exchange Commission and the Office of Federal Housing Enterprise Oversight, to settle charges related to its $10.8 billion accounting scandal.

The SEC's litigation release announcing the settlement can be found here and the Commission's complaint can be found here.

The SEC had charged Fannie Mae with violations of Sections 10(b), 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Securities Exchange Act of 1934 and Rules 10b-5, 12b-20, 13a-1, 13a-11, and 13a-13 thereunder; and violations of Sections 17(a)(2) and (3) of the Securities Act of 1933.

OFHEO's announcement can be found here, OFHEO's Report of the Special Examination of Fannie Mae can be found here, and a summary of the report can be found here.

Though these settlements do nothing to settle the consolidated ERISA, securities and derivative litigation pending against Fannie Mae, readers may recall that Freddie Mac announced a settlement with federal regulators just prior to announcing a settlement of the private derivative and securities class actions.

Disclosure: The author and his law firm are counsel for certain plaintiffs in the currently pending Fannie Mae derivative litigation.

Vacation

Sorry folks, but postings will be somewhere south of slim for the next week or so, as I take a break from my regularly scheduled programming.

Regular posting will resume around May 22.

Good Sarbanes-Oxley Internal Controls = Higher Stock Prices

According to a report issued this week by Lord & Benoit, LLC (a national Sarbanes-Oxley research and compliance firm), the share price of companies that reported clean internal controls (i.e. no material weaknesses) beat the Russell 3000® Index by an average of about 10% over a two year period from March 31, 2004 through March 31, 2006. Shares of companies that reported internal control weaknesses in both 2004 and 2005 lost about 6% over the same period.

The report examined results for all December year-end Accelerated Filers that were registrants one year before Section 404 was required and have submitted at least two Section 404 internal controls assertions. That represents nearly 2,500 publicly traded companies and about half of the entire market capitalization of all publicly traded companies in the United States.

Pre-Emptive Press Releases

They don't appear often enough to call them a trend, yet.

A number of law firms (and their clients) have begun putting out press releases in advance of the deadline for filing a lead plaintiff motion, often indicating their intention to file a lead plaintiff motion.

Last week, Bernstein Litowitz Berger & Grossmann LLP and the Police and Fire Retirement System of the City of Detroit put out this release regarding the securities class actions pending against Bausch & Lomb Inc. in the United States District Court for the Southern District of New York. The release indicated the Police & Fire Retirement System's intention to both file an expanded complaint and a lead plaintiff motion.

The previous week, Kahn Gauthier Swick, LLC and WestEnd Capital Management, LLC put out this release regarding the securities class actions pending against Pixelplus Co., Ltd., also in the Southern District of New York. This release simply noted that WestEnd had retained Kahn Gauthier to pursue claims, with no mention of lead plaintiff issues.

GAO Releases Report On Sarbanes-Oxley Costs For Smaller Businesses

The Government Accountability Office (GAO) has released a report, Consideration of Key Principles Needed in Addressing Implementation for Smaller Public Companies.

According to the GAO's Highlights, the report:

1. Analyzes the impact of the Sarbanes-Oxley Act on smaller public companies, particularly in terms of compliance costs;
2. Describes responses of the Securities and Exchange Commission (SEC) and Public Company Accounting Oversight Board (PCAOB) to concerns raised by smaller public companies; and
3. Analyzes smaller public companies' access to auditing services and the extent to which the share of public companies audited by mid-sized and small accounting firms has changed since the act was passed.

The report starts with the premise that "regulators, public companies, audit firms and investors generally agree" that Sarbanes-Oxley has had "a positive and significant impact on investor protection and confidence."

Putting that aside, the GAO did find that:

costs associated with implementing the Sarbanes-Oxley Act - particularly those costs associated with the internal control provisions in section 404 - were disproportionately higher (as a percentage of revenues) for smaller public companies.

(emphasis added)

The report went on to note however, that:

While public companies - both large and small - have been required to establish and maintain internal accounting controls since the Foreign Corrupt Practices Act of 1977, most public companies and their external auditors generally had limited practical experience in implementing and using a structured framework for internal control over financial reporting as envisioned by the implementing regulations for section 404.

The GAO also found that many of these increased costs are one-time expenses incurred as companies put in place internal accounting controls.

Also of note, the report found that Sarbanes-Oxley benefited the accounting industry as more companies hired mid-size and smaller accounting firms. The effect seems somewhat muted, however, when the full picture is examined:

Overall, mid-sized and small accounting firms conducted 30 percent of the total number of public company audits in 2004 - up from 22 percent in 2002. However, the overall market for audit services remains highly concentrated, with companies audited by large firms representing 98 percent of total U.S. publicly traded company sales (revenues).

The Washington Post has a story on the report here.

ADDITION: Financial Executives International (FEI) has an analysis of the report here.

Feds Restate Financials, Film At 11

Even the Federal government is not immune from having to restate its financials from time to time.

Last week, the Bureau of Economic Analysis (an agency of the U.S. Department of Commerce) announced that:

The estimates of personal income for March and for the first quarter of 2006, which were released on May 1, were overstated.

According to BEA's errata, available here:

Personal income for March was overstated by $38.9 billion (annual rate), and its growth was overstated by 0.3 percentage point (not annualized); first-quarter personal income was overstated by $12.9 billion, and its growth was overstated by 0.5 percentage point (annual rate).

Don't worry - the income is real, the government just recognized it prematurely:

This overstatement of income resulted from including in the March estimate of Government social benefits to persons a prepayment for April for Medicare Part D benefits - the new prescription drug plan that began on January 1.

* * *

In the Monthly Treasury Statement - BEA's data source for payments for the Medicare Prescription Drug Plan - the payment for the month of April, which would normally be made on the first day of the month, was made on March 31 because April 1 fell on a Saturday. According to BEA's standard practice for recording government transactions, this prepayment should have been recorded in April.

The original release with the incorrect data is available here.

Any purchasers of treasury note or bonds out there that feel they paid inflated prices for their government securities as a result of this material misstatement or omission are likely out of luck.

As any law student learns in Constitutional Law, the United States is immune from suit unless it waives its sovereign immunity and consents to be sued. See United States v. Mitchell, 463 U.S. 206, 212 (1983). The sovereign immunity of the United States also extends to its agencies. Gilbert v. DaGrossa, 756 F.2d 1455, 1460 n. 6 (9th Cir.1985). Suffice to say - the feds have not in recent memory chosen to waive sovereign immunity for violations of the federal securities laws.

Opting Out, Or How To Try and Wring Blood From a Stone

Over at the WSJ Law Blog today, Peter Lattman has a post here on the recent spate of announcements by institutional investors that they were opting out of the recently settled securities class action against Qwest.

A press release from the New York State Comptroller Alan G. Hevesi regarding the individual case brought by the New York State Common Retirement Fund (NYSCRF) can be found here. NYSCRF is represented in the Qwest litigation by Lieff, Cabraser, Heimann & Bernstein, LLP.

Of interest (at least to me) - the decision to name Qwest's former outside auditor, Arthur Andersen LLP, as a defendant.

Andersen, of course, was famously convicted of obstruction of justice in 2002 in charges stemming from document preservation issues regarding the auditor's Enron files. That conviction was overturned by a unanimous Supreme Court in 2005.

Following the conviction in 2002, Anderson for all intents and purposes wound down business and while it still exists, press reports indicate that only 200 of Andersen's 28,000 employees remain with the firm.

Indeed, in this release from Comptroller Hevesi regarding Andersen's 2005 settlement in the WorldCom litigation:

The settlement follows intense scrutiny of Andersen's financial status. Anderson only agreed to show us its financial condition after we had finished presenting our case. The $65 million represents a substantial amount of Andersen's remaining assets.

Thus, Andersen:

1. Is essentially out of business.
2. Has little to no assets remaining.
3. Likely has little or no income at this point.
4. Potentially has burned through any insurance policies it carried that covered the relevant period.
   

The logical question - Why name Andersen as a defendant?

Readers, please send in your thoughts.

From Bad, to Worse, to Really, Really Bad

Sometimes the news really does keep getting worse. Just ask Comverse Technology, Inc.

Back on March 14, the company announced that it was creating a special committee of its board of directors to review matters related to stock options grants and indicated a possible need to restate prior results.

Barely a month later the bad news wagon was picking up steam as Comverse announced on April 17 that the company was going to delay filing its 10-K and would restate its historical financial statements for fiscal years 2001-2005 and for the first three quarters of the fiscal year 2006.

In the wake of those announcements, at least six derivative actions have been filed according to this 8-K - four in the New York State Supreme Court and two in the United States District Court for the Eastern District of New York and several securities class actions, also in the United States District Court for the Eastern District of New York.

Then on Monday the company announced the resignations of Kobi Alexander, the company's Chairman and CEO, David Kreinberg, the CFO, and William F. Sorin, a director, Senior General Counsel, and Corporate Secretary.

Then, fast on the heels of the resignations, according to press reports (W$J here and AP via Yahoo! here), Comverse received a subpoena this week from the U.S. attorney's office for the Eastern District of New York regarding a continuing probe into potential backdating of stock option grants at the company.

"Top Ten" Corporate & Securities Articles for 2005

Thanks to Prof. Larry E. Ribstein of Ideoblog for pointing me to Brian Leiter's Law School Reports where I found the "Top Ten" Corporate & Securities Articles for 2005.

As a service to readers, I have tracked down online versions of all ten of the articles and linked to them below.

In alphabetical order by primary author, the articles are:

The Case for Increasing Shareholder Power, 118 Harv. L. Rev. 833-914 (2005), Lucian Arye Bebchuk (Harvard).

The New Dividend Puzzle, 93 Geo. L.J. 845-895 (2005), William W. Bratton (Georgetown).

Sacrificing Corporate Profits in the Public Interest, 80 N.Y.U. L. Rev. 733-869 (2005), Einer Elhauge (Harvard).

Corporate Officers and the Business Judgment Rule, 60 Bus. Law. 439-469 (2005), Lyman P.Q Johnson (Washington & Lee).

In the Shadow of Delaware? The Rise of Hostile Takeovers in Japan, 105 Colum. L. Rev. 2171-2216 (2005), Curtis J. Milhaupt (Columbia).

Are Partners Fiduciaries?, 2005 U. Ill. L. Rev. 209-251, Larry E. Ribstein (Illinois).

Delaware's Politics, 118 Harv. L. Rev. 2491-2543 (2005), Mark J. Roe (Harvard).

The Sarbanes-Oxley Act and the Making of Quack Corporate Governance, 114 Yale L.J. 1521-1611 (2005), Roberta Romano (Yale).

Fixing Freezeouts, 115 Yale L.J. 2-70 (2005), Guhan Subramanian (Harvard). (n.b. Prof Subramanian is the Joseph Flom Professor of Law and Business - yes that Joseph Flom.)

The Public and Private Faces of Derivative Lawsuits, 57 Vand. L. Rev. 1747-1793 (2004), Robert B. Thompson and Randall S. Thomas (Vanderbilt - both) (n.b. - the article is also for sale on Amazon.com here)

File Early, Then Free Ride: How Delaware Law (Mis)Shapes Shareholder Class Actions, 57 Vand. L. Rev. 1797-1881 (2004), Elliott J. Weiss (Arizona) and Lawrence J. White (NYU Business School).

Former Tyco General Counsel settles with SEC

The Securities and Exchange Commission announced Tuesday it had reached a settlement with Mark A. Belnick, the former general counsel of Tyco International Ltd., over claims he received around $14 million in unauthorized and undisclosed relocation loans from the company.

Belnick agreed to pay a $100,000 civil penalty, without admitting or denying the allegations. He was also barred for five years from serving as a director or officer of a public company.

The New York Law Journal has an article here (via law.com).

Belnick remains a defendant in the private securities fraud litigation, where the motions to dismiss were largely denied in October 2004. That opinion is available here.

Meanwhile, in his spare time, Belnick has opened his own law practice, specializing in:

Commercial Litigation; Securities Litigation; White Collar Criminal Litigation; International Litigation; Antitrust and Trade Regulation; Government Litigation; Internal Corporate Investigations; Government Investigations; Intellectual Property Litigation; Arbitration; International Arbitration.

Belnick has received an "AV" rating in Martindale-Hubbell Peer Review Rating, which:

shows that a lawyer has reached the height of professional excellence. He or she has usually practiced law for many years, and is recognized for the highest levels of skill and integrity.

Compliance Week article on PwC Study

Today's edition of Compliance Week has an article (registration required - 30 day free trial) on the PwC study released yesterday, with a quote from yours truly and Securities Litigation Watch's Bruce Carton.

Compliance Week describes itself as:

a newsletter on corporate governance and compliance issues that reaches over 40,000 financial and legal executives at U.S. public companies.

* * *

Relentlessly focused on the disclosure, reporting and compliance requirements of our subscribers, Compliance Week has quickly emerged as a leading resource in this constantly-changing market.

PwC releases 2005 Securities Litigation Study

PricewaterhouseCoopers LLP today released their 2005 Securities Litigation Study. The study is available here (registration required). A press release is also available here.

Noting the "drop" in the number of new filings (see Bruce Carton's take on this trend as (with regard to the earlier Stanford / Cornerstone report) over at Securities Litigation Watch here), the study suggests a number of factors behind the decline in the number of new securities class action filings:

The first is the so-called printing-press factor (see quote from MoFo's Jordan Eth here), suggesting that:

the current backlog of major cases . . . already being handled by the plaintiffs' bar, consum[es] the time and resources of securities plaintiffs' lawyers and caus[es] them to delay new case filings.

The study also points to "the hoped-for deterrent effect of Sarbanes-Oxley," and "[m]ore vigorous investigation, enforcement, and prosecution by the Securities and Exchange Commission (SEC) and the Department of Justice (DOJ)" as possible factors in the decline.

Also, for those that may have missed it, The 10b-5 Daily had a post last week on NERA Economic Consulting's recently released study of class action securities litigation.