SEC To Propose Rules on Political Spending

The SEC has indicated that it plans to issue a Notice of Proposed Rulemaking on requiring public companies to disclose their spending on politics. The Harvard Law School Forum on Corporate Governance and Financial Regulation has an analysis of the issues - SEC to Propose Rules on Corporate Political Spending by April 2013

Supreme Court Affirms $2 Billion Judgment and $300 Million in Fees for Breach of Fiduciary Duty

The Delaward Corporate and Commercial LItigation Blog has an interesting post regarding this decision, with a link to the 110-page decision which awarded damages over breach of fiduciary duty related to the sale of a company.

Supreme Court Affirms $2 Billion Judgment and $300 Million in Fees for Breach of Fiduciary Duty

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Morgan Stanley Cut Facebook Estimates Just Before IPO?

When I posted last week that the Facebook IPO was an opportunity for fraud, and quoted Jim Sallah, the well-known Boca Raton securities attorney, I was talking about stock scammers, not major brokerage firms.
Reuters is reporting, under a headline Morgan Stanley Cut Facebook Estimates Just Before IPO that in the run-up to Facebook's $16 billion IPO, Morgan Stanley the lead underwriter on the deal, unexpectedly  told some of its clients that the firm was reducing its revenue forecasts for the company.

It remains to be seen whether that was fraudulent conduct, but that information, if true, is certainly going to attract the interest of regulators and customer attorneys. The impact of such a statement, in particular coming from the lead underwriter might have contributed to the weak performance of Facebook shares, which sank on Monday and Tuesday - their second and third days of trading - to end more than 18 percent below the IPO price.

Institutions and major clients generally enjoy quick access to investment bank research, while retail clients in many cases only get it later. According to the article, it is unclear whether Morgan Stanley only told its top clients about the revised view or spread the word more broadly. The company declined to comment when asked who was told about the research.

How The IPO Ruined Google

Interesting analysis of how serving shareholders intead of your business model can ruin your company - How the IPO Ruined Google

Two Executives Sued in Texas to Recover Bonuses and Stock Profits Received During Accounting Fraud

Two former executives at an Austin, Texas-based surgical products manufacturer were sued today by the SEC to recover bonus compensation and stock sale profits they received during an accounting fraud at the company. The CEO and CFO of the company have not been charged with personal misconduct, but are still required to reimburse the manufacturer for bonuses and stock profits that they received after the company filed fraudulent financial statements..

"Clawback of incentive compensation and stock sale profits as authorized under the Sarbanes-Oxley Act is yet another reason for CEOs and CFOs to be vigilant in preventing misconduct and requiring that companies comply with financial reporting obligations," said Robert Khuzami, Director of the SEC’s Division of Enforcement.


Two Executives Sued in Texas to Recover Bonuses and Stock Profits Received During Accounting Fraud

Risk Alert on Strengthening Practices for Underwriting of Municipal Securities, and Investor Bulletin on Municipal Bonds

The alert issued by the SEC notes that in recent years there has been significant attention focused on the financial condition of some state and local governments. It cites concerns about the extent of written documentation by broker-dealers of due diligence efforts and supervision of municipal securities offerings. Included in the alert are examples of practices used by broker-dealers that may help to demonstrate due diligence and supervisory reviews, such as detailed written policies and procedures, use to commitment committees, due diligence memoranda, etc. activities.


Risk Alert on Strengthening Practices for Underwriting of Municipal Securities, and Investor Bulletin on Municipal Bonds

Judge Orders Plastics Executive to Pay $49.5 Million in SEC Case

The SEC has announced the successful resolution of its trial against a plastics industry executive charged with lying in SEC filings regarding his ownership of Musicland Stores Corporation stock. The executive and a trust he controlled have been ordered by a federal judge to pay $49.5 million in a final judgment against them. The executive failed to file truthful 13D forms and neglected to make other required filings, which are required when a person acquires beneficial ownership of more than 5 percent of a voting class of a company's publicly traded stock. Because of this the execute and the trust thereby materially misrepresented their ownership of Musicland stock.

Following a 10-day trial in May in federal court in Newark, N.J., a jury returned a verdict finding the executive liable for securities fraud and disclosure violations on all counts against him. The jury also found the MAAA Trust controlled by him liable for disclosure violations.

Judge Orders Plastics Executive to Pay $49.5 Million in SEC Case

Attracting Investors - Movie Industry

Many filmmakers begin their careers by persuading private investors to back them. Indeed, unless you are a star like Kevin Costner or Barbra Streisand, it is rare for a major studio to fi¬nance a beginning filmmaker. Banks will not lend money without substantial collateral. Loans based on pre-sales are difficult to obtain because territory buyers want packages with name actors from an experienced director. That leaves most film¬makers looking to Mom, Dad, and whatever they can scrape up from friends, relatives, and MasterCard. While such resources have financed many films, distributor’s expectations have risen over the years. With a glut of independent motion pictures available, many distributors are not interested in acquiring a feature unless it 1) is shot with name actors; or 2) wins an important film festival.
More at the Entertainment Law Resources Blog