LexisNexis Business: Business

The Subprime Class Action Litigation -- Predictable or Revolutionary Law?

J. Scott Colesanti — Wed, 07 May 2008 15:23:59 GMT

Overall, the first wave of the subprime class action litigation, which centers on allegations of misstatements/delayed statements by public companies to their shareholders concerning the extent of collateralized debt obligation (CDO)-related losses, can be said to predictably follow Supreme Court directives on the scope of defendants. These cases may also seize upon lingering court inconsistencies concerning proof of the potential fraud they c

A Crisis of Confidence: The Treasury Blueprint, And Its Unlikely Impact Upon The Securities & Exchange Commission

J. Scott Colesanti — Wed, 07 May 2008 15:17:23 GMT

The "Blueprint" released by Treasury Secretary Henry M. Paulson on March 31, 2008, would add to, subtract from, and condense and reconstitute the entities presently charged with regulating the securities, commodities, banking and insurance industries. The Plan is at times purposefully vague, and elsewhere deliberately harsh. J. Scott Colesanti, Special Professor at the Hofstra University School of Law, teaching securities r

Tellabs On Remand: An Opinion Which Raises Significant Questions

Thomas O. Gorman — Mon, 28 Apr 2008 14:26:01 GMT

On remand, the Seventh Circuit held in Makor Issues & Rights, Ltd. v. Tellabs, Inc., 513 F.3d 702 (Jan. 17, 2008), that plaintiff had pled a strong inference of scienter within the meaning of the Private Securities Litigation Reform Act (PSLRA) as interpreted by the Supreme Court. The court also appears to have modified its earlier decision on the use of confidential sources, this time authorizing their use. At the same ti

Rationalizing U.S. Financial Regulation: The Treasury's Plan

James A. Fanto — Thu, 24 Apr 2008 09:35:17 GMT

Financial and corporate crises bring regulation; the bigger the crisis, the more the regulation. A few years ago, major corporations, particularly Enron and WorldCom, were engulfed in scandals. Coming hard upon the bursting of the dot.com bubble and revelations of improper sales practices of Wall Street banks, these scandals were the catalyst for the Sarbanes-Oxley Act of 2002 ("Sarbanes-Oxley"), a far-reaching reform

Breaking Up Corporations

Neil E. Harl — Thu, 24 Apr 2008 09:30:19 GMT

In this Expert Commentary, Neil Harl describes the challenges involved in the liquidation of farm and ranch business organizations, where there are typically substantial amounts of appreciated assets, such as farmland, that are eligible for long-term capital gains treatment.

Mr. Harl writes: The first th

Derivative Suits by LLC Members in New York: Tzolis v. Wolff

James M. Wilson, Jr. — Thu, 24 Apr 2008 09:25:08 GMT

On February 14, 2008, the New York Court of Appeals held that members of limited liability companies ("LLC") may bring derivative suits on behalf of their LLCs, just as shareholders and partners may bring such suits on behalf of their corporations and limited partnerships respectively. The majority's decision is controversial because New York's limited liability statute does not specifically authorize derivative suits by LL

Wolfe and Pittenger on Disney and Good faith

Donald J. Wolfe Jr. & Michael A. Pittenger — Tue, 15 Apr 2008 14:19:09 GMT

In its June 8, 2006 opinion in In Re The Walt Disney Company Derivative Litigation, the Delaware Supreme Court affirmed the Delaware Court of Chancery’s determination that Disney’s directors had not breached their fiduciary duties in connection with the hiring or termination of Michael Ovitz as President of The Walt Disney Company. Analyzing the case, Donald J. Wolfe, Jr. and Michael A. Pittenger write:

Wolfe and Pittenger On Revlon, Inc. and New Standard of Judicial Review

Donald J. Wolfe Jr. & Michael A. Pittenger — Fri, 04 Apr 2008 15:14:44 GMT

In this landmark decision, the Delaware Supreme Court established a new standard of judicial review applicable to a challenge by shareholders to the board's endorsement of a merger transaction once it has become inevitable that the company will be broken up or sold. In such a circumstance, the duty of the board was deemed by the Court to change so as to approximate that of an auctioneer, obligated exclusively to maximize the compan

Wolfe and Pittenger on Privilege Ruling in Ryan v. Gifford

Donald J. Wolfe Jr. & Michael A. Pittenger — Fri, 04 Apr 2008 15:03:28 GMT

In Ryan v. Gifford*, 2007 Del Ch. LEXIS 168 (Nov. 30, 2007), the Delaware Court of Chancery examines the extent to which a plaintiff stockholder may gain access by way of discovery to purportedly privileged communications by and amon

Regulation R Implementing Exceptions for Banks from the Definition of 'Broker' in Section 3(a)(4) of the 1934 Exchange Act

Robert A. Boresta & Basil V. Godellas — Fri, 14 Mar 2008 16:44:36 GMT

As a result of the Gramm-Leach-Bliley (GLB) Act, banks are required to "push out" certain of their securities brokerage activities to registered broker-dealers. In September 2007, the SEC and the Federal Reserve Board jointly adopted Regulation R to implement several of the exceptions for a bank to engage in securities activities without being registered as a broker-dealer. In this commentary, Robert A. Boresta and Basil V.

Sandell Management's Short Sales and Fraud Allegations

Joseph D. Edmondson, Jr. — Wed, 12 Mar 2008 07:48:28 GMT

Although the SEC's efforts to directly regulate hedge funds have been thus far unsuccessful, its enforcement program against hedge funds and their investment advisers remains aggressive. Hedge funds are some of the most active traders on Wall Street and represent a large measure of market volume. Although a settled case, Matter of Sandell Asset Management Corp. is still a reminder to market participants that the SEC can, and w

Lapine on Cleveland v Deutsche Bank

Ken Lapine — Mon, 11 Feb 2008 14:47:50 GMT

On Jan. 10, 2008, the City of Cleveland filed a complaint against a multitude of investment banks alleging that their proliferation of subprime loans resulted in foreclosures that created a public nuisance. In this commentary, Kenneth M. Lapine provides a step-by-step breakdown of the argument being put forth by the City.

Mr. Lapine writes: &ldqu

The Perfect Storm: Legal Issues Surrounding the Subprime Mortgage Lending Crisis

Robert M Jaworski — Tue, 05 Feb 2008 13:49:58 GMT

Robert M. Jaworski analyzes the "perfect storm" that has hit the subprime mortgage industry--including what caused the storm and what the effects of the storm have been. Mr. Jaworski writes:

James A. Fanto — Tue, 05 Feb 2008 13:32:11 GMT

Professor James Fanto discusses the United States Supreme Court decision in Stoneridge Investment Partners, LLC. v. Scientific-Atlanta, Inc. 2008 LEXIS 1091. That case held that participants in a public company's fraud may not be sued by investors under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated by the Securities and Exchange Commission under that A

James M. Wilson Jr. on Class Certification Trends: Non-Injury Class Actions and Issue Certification

James M. Wilson, Jr. — Thu, 24 Jan 2008 07:54:55 GMT

In September 2006, the federal district court for the Eastern District of New York certified a $200 billion national class action lawsuit made up of tens of millions of smokers of "light" cigarettes, alleging that health-conscious smokers relied on these terms to buy what they thought was a safer product. James

Professor James Fanto on Shareholder Nominations of Directors: The Saga Continues

James A. Fanto — Thu, 24 Jan 2008 07:53:53 GMT

Recent court rulings have thrust the SEC into the controversy over shareholder nominations of directors for election to the board, an area of corporate governance of publicly traded companies that has been particularly active in recent years. On one side is the traditional bu

D. Gordon Smith on The Plight of Entrepreneurs Under Delaware Fiduciary Law

D. Gordon Smith — Wed, 23 Jan 2008 13:48:38 GMT

One of the most common sources of conflict between venture capitalists and entrepreneurs who are engaged in striving to build a valuable company is the decision whether to sell the company. It is no surprise when venture capitalists want to sell before entrepreneurs feel ready. Venture capitalists benefit from sales in ways that entrepreneurs don&rs

Elaine Gagliardi on Appeals Settlement Guidelines for Family Limited Partnerships and Limited Liability Companies

Elaine Hightower Gagliardi — Wed, 23 Jan 2008 13:08:41 GMT

The Internal Revenue Service has issued appeals settlement guidelines for family limited partnerships and limited liability companies that address issues of valuation, gross estate inclusion, indirect gifts and penalties. Professor of Law Elaine Gagliardi notes that “[t]he guidelines acknowledge the historical use of such entities to assist in

Jensen on Planning for an Effective Family Business Succession

J. Alan Jensen — Wed, 23 Jan 2008 12:53:34 GMT

The website MySpace.com’s lawsuit against theglobe.com, alleging violations of the CAN-SPAM Act, recently was decided in favor of MySpace.com. The court rejected the defense that the Act did not apply to theglobe.com’s act of registering "dummy" profiles on MySpace.com and then using those accounts to send numerous unsoli

James Fanto on Stock Option Backdating and Its Implications for Firm Governance

James A. Fanto — Fri, 18 Jan 2008 16:09:06 GMT

Recent stock option backdating scandals, where an employee stock option recipient obtains an immediate return that he or she has not earned thanks to falsified corporate books and records, have received considerable legal attention lately. Professor James Fanto of

R. Bradbury Clark on the Effect of California's Uniform Partnership Act of 2008 on Partnership Purposes

R. Bradbury Clark — Fri, 18 Jan 2008 15:41:01 GMT

California's Uniform Limited Partnership Act of 2008 has changed one of the basic tenets of limited partnerships: their permitted purposes. Prior to the 2008 Act, limited partnerships could be formed only for the same purposes as a general partnership and that is to "carry on a bus