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Doing Business After Sarbanes-Oxley
In a recent article in this newsletter, we described a hypothetical situation about a publicly traded health care entity that was under attack by government regulators, disgruntled shareholders, and likely a qui tam relator. See, Michael E. Clark, Proffer Agreements May Be a Viable Strategy for Negotiating with Government, (Health Care Fraud & Abuse Newsletter, October 2002). This hypothetical situation continues in this article, as we illustrate some of the heightened compliance risks facing officers, directors, and attorneys who represent publicly traded entities as a result of The Sarbanes-Oxley Act of 2002 ('Sarbanes-Oxley'), Pub. L. 107-204, 116 Stat. 745 (2002), which ushered in major reform measures when signed into law on July 30, 2002 (and also in light of other proposals for strengthening corporate accountability from the major self regulatory organizations and exchanges: the National Association of Securities Dealers (NASD) (see NASDAQ Corporate Governance Proposals, September 13, 2002) and The New York Stock Exchange (NYSE) (see Corporate Governance Rules Proposals Reflecting Recommendations from the NYSE Corporate Accountability and Listings Standards Committee As Approved by the NYSE Board of Directors, August 1, 2002).
Hypothetical Case Revisited
A publicly traded network of long-term nursing facilities received grand jury subpoenas to produce financial information, billing information, and various health care records in connection with a probe of possible billing fraud activities over the past few years. Because the affidavits to the subpoenas were sealed, the extent of the probe was initially unclear, particularly as to whether the company's officers or directors were targets of the investigation. These officers and directors, mindful of the gravity of the situation, coordinated their response to the subpoenas and to later government requests. Before long, as a result of an internal investigation launched after the subpoenas were received, it became apparent that key officers of the company were targets of the government's probe. After news of the probe became known, the value of the company's stock dropped sharply, spawning several lawsuits (including class actions and a shareholder's derivative suit) against the company, as well as its key officers and directors. Not long afterward, the Securities and Exchange Commission (SEC) subpoenaed the company's chief executive officer (CEO), chief operating officer (COO), and chief financial officer (CFO) to testify and produce documents. Because directors of the company's board wanted to stem the hemorrhaging from these events, and believing that its survival depended on keeping its right to participate in federal programs, the board decided there was no choice but to fully cooperate with investigators (in hopes that this would prevent, or at least minimize, any subsequent penalties). Not wanting to provide ammunition for the civil suits against the company, the board accepted a negotiated consent decree in which the company didn't admit to any wrongdoing, but under which it had to pay a large penalty and revise its compliance program to prevent any future reporting activities that may mislead investors. How the targets of the investigation may fare was even less certain. They were put on a paid leave of absence, and offered the right to retain independent counsel and have the payment of their attorneys' fees forwarded under an indemnity agreement.
Major Differences In UK, U.S. Copyright Laws
This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.
The Article 8 Opt In
The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.
Strategy vs. Tactics: Two Sides of a Difficult Coin
With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.
Removing Restrictive Covenants In New York
In Rockwell v. Despart, the New York Supreme Court, Third Department, recently revisited a recurring question: When may a landowner seek judicial removal of a covenant restricting use of her land?
The Cost of Making Partner
Making partner isn't cheap, and the cost is more than just the years of hard work and stress that associates put in as they reach for the brass ring.