Is SOX Worth It?
May 25, 2005
With the imminent phase-in of the SEC rules implementing Section 404 of the Sarbanes-Oxley Act of 2002 (SOX), which requires public companies to issue a management report and submit auditor attestation regarding the adequacy of the company's internal controls over financial reporting, the public debate over the cost-benefit analysis of SOX has intensified. The Sarbanes-Oxley Act and its implementing rules have provoked much controversy in their attempt to strike the right balance between protecting investors and unnecessarily cannibalizing scarce corporate resources owned by those same investors. While the SEC has historically offered concessions to smaller public companies due to the relatively higher regulatory burdens placed on them, it remains to be seen whether the SEC will continue to be sensitive to the burdens on smaller public companies in the implementation of SOX.
Enforcement Against Market-Driven Misconduct
May 24, 2005
Government plays a critical role in the design of some free markets and in the operation of many. The recent energy debacle in California resulted in part from defective governmental design of California's markets for wholesale and retail electricity. Even where markets are shaped largely by private-sector activity, government often has a critical role in influencing the incentives that guide conduct in those markets. In particular, law enforcement agencies, especially regulatory agencies, have a critical responsibility for the proper functioning of competitive markets within their jurisdiction -- the responsibility to elaborate and enforce applicable laws so as to constrain market forces from driving participants into socially undesirable conduct.
The Corporate Attorney-Client Privilege Survives
May 24, 2005
The dangers to the proper functioning of the corporate attorney-client privilege in the wake of recent federal and state law enforcement activities have been well-documented and widely discussed. The year is only half over and already two reports on the issue have been produced and a third major inquiry is underway. A survey by the Association of Corporation Counsel disclosed that 30% of the respondents' corporate clients had "personally experienced an erosion in protections offered by privilege/work product." A similar survey of outside counsel conducted by the National Association of Criminal Defense Lawyers reported 47% of corporate clients had experienced such an erosion. Both organizations have taken up the difficult task of 'debunking the myth' that assertion of the privilege is inappropriate or a sign of guilt.
Settlement Payments Exempted from Avoidance
May 24, 2005
Under ' 546(e) of the Bankruptcy Code (the so-called "stockbroker defense" to select voidance actions), Congress has exempted from avoidance any "settlement payment" that is made "by or to a commodity broker, forward contract merchant, stockbroker, financial institution, or securities clearing agency, that is made before the commencement of the case," except where the transfer is fraudulent under ' 548(a)(1)(A) of the Bankruptcy Code. 11 U.S.C. ' 546(e). So what exactly is a "settlement payment"? Prior to the BAP decision in <i>In re Grafton Partners</i>, the answer to this question was surprisingly unclear.
CD: PR and Advertising: Where do you spend your marketing dollars?
May 17, 2005
Marketing oriented public relations and advertising have the same objectives ' to increase brand awareness and help pre-sell a product or message by achieving media exposure. Although both are effective in reaching trade and consumer audiences, there are significant differences in cost, control, and credibility. Our panel of experts will equip you with the information you need to understand the great benefits of both public relations and advertising.
Special Issue: A Roundtable Discussion on Leading Compliance Issues in the U.S. and EU
May 09, 2005
Throughout the world, Sarbanes-Oxley (SOX) legislation might well have had the biggest impact in corporate governance since the introduction of limited liability. To that end, jurisdictions outside the U.S. have not been idle. A recent Eversheds survey found more than 100 studies on the topic in 29 European countries within and outside the EU. Clearly, proper compliance to corporate governance guidelines is top of the list to in-house counsel across the EU, as well as the U.S. To avoid civil and criminal penalties, multinational companies have to comply with laws and principles of good governance in all of the countries where they operate. U.S. legislation attempts extra-territorial reach. That legislation is in most cases in addition to, rather than in substitution for, local law, even for NYSE-listed entities. For multinationals, then, even if SOX is the beginning of the story, it is not the end. This roundtable sought to road-test some of these issues and look to some of the U.S.'s best governed corporations to see if there is a map for the journey ahead.
'Floating' Forum-Selection Clauses: The M/S Bremen Afloat in the Wake of Norvergence
May 02, 2005
On June 30, 2004 an Involuntary Petition under Chapter 11 of the Bankruptcy Code was filed against NorVergence, Inc., the New Jersey telecommunications company. While this filing represented the likely end of a telecommunications company which, at its zenith, employed 1500 people, with more than 11,000 equipment leases in effect worth some $200 million, it also marked the beginning of litigation arising out of those leases now being waged in various state and federal courts across the country involving thousands of lessees, scores of finance companies and dozens of governmental agencies.
Patent Preparation Costs: How Low Can You Go?
May 02, 2005
According to recent statistics, approximately 342,441 utility patent applications were filed in 2003 in the United States, and 169,028 utility patents were granted. These totals have nearly doubled over the past decade. Nonetheless, patent prosecution costs have seemed to trend lower or remain flat in recent years, even as courts are requiring more and more from application drafters. Does this prosecution revenue squeeze portend an increased economic risk for the patent practitioner? Does this pose more trouble for patent quality in general? Is a market glut of patent attorneys creating downward pressure on patent prosecution costs and resulting patent quality? Besides refusing to enter into a pricing war that is ultimately bad for our patent system, patent attorneys may wish to consider implementing changes to the patent system that help improve patent quality by reducing the recent flood of patent attorneys and agents entering the market.
Intellectual Property Transfer Pricing and Taxation
May 02, 2005
Multinational companies with distributed operations and geographic centers of specialized activities tend to transfer intangibles including intellectual property assets among their various affiliates. These transfers between entities are priced at levels that approximate fair market value and are simultaneously consistent with every company's duty to maximize shareholder value. Tax authorities have long complained that multinationals are setting international transfer prices to avoid taxes by lowering income in high tax jurisdictions and raising income in low tax jurisdictions. In theory, a multinational should not suffer prejudice in such a case (beyond the payment of appropriate penalties) because international tax treaties contemplate adjustments; the underpayment would be collected and the overpayment refunded in each respective jurisdiction. As a practical matter however, there is a real risk of double taxation since sovereign tax authorities may come to disagree on transfer pricing levels.
