Business Formation - Blogs
- Ken Lewis, BofA and the Fed Strong-Arm: Ten Questions
Bank of America's acquisition of Merrill Lynch went through, so we will (fortunately) never know what would have happened if the deal had collapsed. But as detailed in the April 23, 2009 letter (here) from New York AG Andrew Cuomo to Sen. Chris Dodd, Rep. Barney Frank and others, if it had been up to BofA, the deal would not have closed, and it was only as a result of a combination of threats and inducements from Henry Paulson and Ben Benanke that BofA and its Chariman, Kenneth Lewis, were...
(April 23, 2009) - What is Class F common stock?
Adeo Ressi, the founding member of The Funded, recently announced the establishment of The Funded Founder Institute. The Founder Institute helps founders launch innovative companies by providing training, services, and company-building assignments, such as incorporating the business, filing provision patents, and setting up books and records. The Institute offers a four month program, called a Semester, hosted initially in the Bay Area and then expanding to locations around the world. The...
(April 22, 2009) - Helmsley estate: $136M to charity, $1M to dogs
Helmsey's estate made 53 charitable grants this week. Most of the money was given to hospitals and for medical research. Only 1 Million was given to 10 animal and dog charities equally. These donations came after a New York judge ruled that the trustees for the Helmsley Charitable trust has the sole authority to decide which charities would benefit from the trust.
(April 21, 2009) - SEC Updates Rule 10b5-1 Guidance
As reflected in the most recent dismissal motion rulings in the Countrywide subprime securities lawsuit, the proper use of a Rule 10b5-1 trading plan can provide a substantial defense to allegations of securities law violations. In her April 6, 2009 opinion (here), Central District of California Mariana Pfaelzer dismissed the insider trading allegations against certain individual defendants whose trading plans were in order. However, she refused to dismiss the insider trading allegations...
(April 21, 2009) - WSGR online venture financing term sheet generator
[Below is the text of a WSGR email update.] Always looking for ways to better serve the entrepreneurial community, Wilson Sonsini Goodrich & Rosati is pleased to announce the release of the WSGR Term Sheet Generator, a publicly available online tool that allows entrepreneurs and investors to generate an initial draft of a term sheet for a preferred stock financing. By answering a series of questions, users are guided through the principal variables contained in a venture financing term...
(April 21, 2009) - Earth Day Essay: Climate Change and Corporate Risk Assessments
The recent Environmental Protection Agency (EPA) proposal to find that greenhouse gases "contribute to air pollution that may endanger public health or welfare" is just the latest in a series of actions and events suggesting that climate change related issues could affect a large number of companies, in a variety of ways, including most specifically with respect to at least some companies' disclosure obligations. These trends could have important implications for potential liability exposures...
(April 21, 2009) - A New Auction Rate Securities Litigation Variant
The collapse of the market for auction rate securities (ARS) has generated a flood of litigation, mostly brought by angry ARS investors against the broker dealers who sold them the securities or against the mutual funds that allegedly failed to disclose that their assets were invested in these kinds of securities. More recently (refer for example here), companies that invested in ARS and carried the securities on their balance sheet have been sued by their own shareholders in connection with...
(April 20, 2009) - Alternative Entity Decisions from the Delaware Courts
Lyondell Chemical Company, et al. v. Ryan, No. 401, 2008, Berger, J. (Del. March 25, 2009). This shareholder derivative action challenged a merger transaction where the directors negotiated the deal in less than a week, only met for seven hours to discuss the transaction, did not press the buyer for a better price and did not conduct even a limited market check. The Court of Chancery "decided that 'unexplained inaction' permit[ted] a reasonable inference that the directors may have consciously...
(April 20, 2009) - D&O Insurance: Knowledge, Renewal and Rescission
In an interesting decision that raises a host of important issues, a federal district court applying Arkansas law held that due to renewal application misrepresentations, a hospital's D&O insurance policy is void ab initio, and therefore that the hospital must refund amounts the insurer previously paid as defense costs. The April 17, 2009 opinion, written by Eastern District of Arkansas Judge Susan Webber Wright can be found here. Background The insurance dispute involves three key events:...
(April 19, 2009) - Faith-Based Estate Planning
David A. Atraus, a Nevada Estate Planning Lawyer, has published a book titled Faith-Based Estate Planning: Our Values and Valuables. The book was written after contacting hundreds of religious clergy throughout the nation, and took him several years to write. Upon a first glance, I was very impressed. The book covers Estate Planning issues like living trusts, wills, medical directives, long-term care insurance and life insurance on many religions including Baha'i, Buddhism, Christianity (10...
(April 19, 2009) - Madoff: The Britney Spears Connection?
Although a wide variety of surprising details have come to light as the Madoff scandal has been exposed, there has as yet been no reported connection between the scandal and Britney Spears-that is, until now. A handwritten complaint filed in the Eastern District of Michigan on March 16, 2009 raises a number of, well, colorful allegations involving Spears and an assortment of other unexpected persons. The complaint (here) purports to be filed on behalf of none other than Bernard L. Madoff...
(April 16, 2009) - More About Life Sciences Companies and Securities Litigation
In prior posts (most recently here), I discussed the fact that while litigation against the financial sector has predominated recent securities lawsuit filings, plaintiffs' attorneys also have targeted other sectors, including in particularly the life sciences sector. An April 2009 memorandum by David Kotler of the Dechert law firm entitled "Dechert Survey of Securities Fraud Class Actions Brought Against Life Sciences Companies" (here) takes a closer look at the 2008 life sciences securities...
(April 15, 2009) - Judge Calls Plaintiffs' Firm's "Monitoring" Services "Shocking ...
One of the recurring issues in securities litigation is the way the erstwhile class counsel and their clients, the prospective class representatives, come together. In what one federal judge described as a "blatant, shocking conflict of interest," it appears, from testimony at a recent lead plaintiff selection hearing, that the leading plaintiffs' firms are providing investment portfolio "monitoring services" for which the firms are paid only if their public pension fund clients pursue...
(April 15, 2009) - Courts in Georgia: Magistrate Court, State Court, Superior Court, Court of Appeals, Supreme ...
When it comes time for a person to file a lawsuit in Georgia, there are many different courts to choose from. It is often confusing for a non-lawyer to determine which court is the proper one for his dispute. This blog will hopefully shed some light on the appropriate trial court in which to pursue disputes. However, this is by no means a comprehensive list. Make sure to contact an experienced business attorney for further guidance on choice of forum. Superior Court: This court has exclusive...
(April 14, 2009) - Probate and Guardianship fees may increase by thousands in Florida
SB 1718 & HB 5117 dealing with funding the court would create new filing fees in probate and Guardianship cases that would range from $1,000 to $5,000, depending on the value of the estate of the person being protected. The increase in filing fees is linked to probate cases but includes all guardianship proceedings. In addition to the current fee of $280, the additional fees will be tied to the person's estate. Depending on the value of the estate and whether the House or Senate version of...
(April 14, 2009) - Defaults, Bankruptcies and D&O Claims
Deteriorating economic conditions threaten a massive wave of corporate defaults. Corporate borrowers' inability to fulfill debt obligations could not only prompt a bankruptcy filing surge, but could also result in a flood of lawsuits and claims as creditors and shareholders seek to recoup their losses. These claims could present a host of challenging D&O coverage issues. In the latest issue of InSights (here), I take a look at the conditions that could contribute to an increase in corporate...
(April 13, 2009) - Corporate Governance: Separating the CEO and the Chairman Roles
A growing chorus of voices is calling for public companies to make the separation of the Chairman and CEO functions the default governance structure. This movement, which may have the support of the new SEC Chair, appears likely to lead to some type of "adapt or explain" approach. Increasing evidence that the companies where the CEOs also act as board Chair are likelier to have "certain troubling governance characteristics" will likely encourage shareholder interest in the initiative as well....
(April 13, 2009) - Digital Assets and Estate Planning
Back in 2006 and 2007 I wrote several articles on Digital Assets and Estate Planning. Now that we are in 2009, there is even more need for Digital Asset protection in your Florida Estate Planning Documents. Digital assets are those that expire upon your death and are often associated with Email and website accounts. Most of these accounts are not actual property. They are licenses and these licenses generally expire upon your death. A new company Legacy Locker is attempting to solve this...
(April 13, 2009) - Floirda Probate and Letters of Administration
Often when someone dies, they have money in a bank account that does not have a joint owner or a payable on death designation (POD). These banks often tell family members that they need "Letters of Administration" to distribute the funds. While this may be trust in some cases, most Florida Probate Courts will only issue Letters of Administration for Formal Probate Cases. If the decedent has been dead for more than 2 years or the assets subject to probate are less than $75,000 then you qualify...
(April 13, 2009) - Stop Florida Annuity Scammers from selling Life insurance as an investment
The Palm Beach Post.com has an article which describes a recent trend in Annuities in which scammers sell and churn an insurance policy sold as an annuity in which there are very high surrender fees and limited access to the money for 10 or more years. These policies are being sold to 85 year old individuals as investments when they cannot touch the money for more than 10 years and have very high surrender fees if they do. Most reputable annuity policies, they say, allow access to the money...
(April 12, 2009)