The judge in the Symbol Technologies criminal case has  reportedly denied the defense motion to have the jury polled following the bizarre turn of events discussed here.  You may recall that defense attorneys in that case made a motion to bring the jurors back to court to be questioned as to whether they actually intended to acquit two of the defendants. 

This motion was made post-trial after one of the defense attorneys spoke with seven of the twelve jurors, and they all concurred that the jury had voted to acquit two of the three  defendants completely, and to acquit the third defendant of all charges except one.  This supposed acquittal was never announced in open court, however, because at the conclusion of the a six-week trial and four days of deliberations, the jury presented the judge with a note stating "We are at a deadlock. We have exhausted all options."  The judge then granted a mistrial  at the request of the defense attorneys, and everyone basically went their separate ways.  Defense lawyers claim that the announced deadlock only related to the one charge against the third defendant.

Anyway, according to a February 28, 2006 article by Robert Kessler of Newsday, U.S. District Judge Leonard Wexler has denied the motion to poll the jury, finding that it was contrary to established legal precedent to question the jurors after the trial ended.  According to the article, the judge stated that

his chief court clerk, Josiah Kharjie, had collected the jurors' verdict sheets and the main sheet that lists how all the jurors voted was blank. Wexler noted that the individual verdict sheets, which 11 of the 12 jurors had used to record their own views, had a mixture of guiltys and not-guiltys.

In any event, Wexler said neither the jurors' later recollection to Sommer of how they would have voted nor the verdict sheets counted as evidence. The only thing that legally counted was a verdict delivered in open court, and that had not occurred, Wexler said.

March 29, 2006

SLW Contest Winner

Last week in this SLW Contest we challenged readers to answer the waaaaay-too-obscure question below.  In hindsight, it really wasn't a fair question--it was just something I noticed as I pored through some old SEC Litigation Releases from 1997 and 1998.  The question was:

What "SEC first" that launched a trend that continues to this day occurred on September 1, 1998?

Clue: It relates to the Enforcement Division and the answer lies in this SEC Litigation Release.

Well, we actually have a winner:  Michael Marek of Financial Markets Analysis, LLC in Princeton, NJ.  Michael correctly noted that September 1, 1998, was the date on which the SEC first used a press release-style "headline" in a Litigation Release. 

Prior to that date, the SEC had simply used something like this:

SEC v. THETA GROUP, LLC, SHADOWSTONE PARTNERS I, LLC,
SCOTT S. BELL AND R. SCOT RUBEL  (USDC N.D. Ill., No. 96 C 7987,
filed December 5, 1996) 

So today, because of the out-of-the-box thinking of some unsung SEC staffer whose name will probably never be known, we are blessed with catchy headlines such as "SEC Settles With Motivational Speaker" to keep us interested in the SEC's enforcement efforts.

Michael Marek, congratulations.  As promised, SLW hereby bequeaths Total Consciousness upon you.  So you've got that going for you, which is nice.

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March 28, 2006

Bill May Prohibit Insider Trading by Congress

Should members of the U.S. Congress be permitted to trade securities based on inside information learned as part of their jobs in the "halls of Congress?"

The Law Blog notes in this post that, according to this article in the WSJ,

Two Democrat lawmakers plan to introduce today a bill that would block trading on such inside information. Current securities law and congressional ethics rules don't prohibit lawmakers or their staff members from buying and selling securities based on information learned in the halls of Congress.

The article further states:

Rep. Louise Slaughter, the New York Democrat who wrote the bill, said: "Top leadership aides know what is happening before anyone else. The potential for abuse there is incredible."

Notably, the article does not mention a 2004 academic study that indicated that there appears to be much more than just "potential" for abuse going on already.  As discussed in this November 2004 post on SLW and an earlier post by Professor Bainbridge,

a recent study by Alan J. Ziobrowski of Georgia State University and colleagues at three other schools showed that during the 1990s, senators' stock picks (which must be publicly disclosed periodically) beat the market by 12 percentage points a year on average.  By comparison, corporate insiders only beat the market by about six percentage points a year, and U.S. households underperformed the market by 1.4 percentage points a year on average.

As reported in this article in Sunday's Philadelphia Inquirer, the authors of the study conclude that these results "suggest that senators are trading stock based on information that is unavailable to the public, thereby using their unique position to increase their personal wealth...." The study adds that it is as if "senators knew appropriate times to both buy and sell their common stock."  The article quotes Ziobrowski  as stating in a recent interview that "there is cheating going on, at a 99 percent level of confidence."

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March 27, 2006

Lunch Police

The SEC Lunch Police is ramping up its operations.   If they so much as see a ham sandwich being dangled out there, watch out.

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March 23, 2006

Back on Top

Less than one year after being skewered by the WSJ in an article entitled "J.P. Morgan's $630 Million Error" that questioned his judgment and litigation strategy in the WorldCom case, Skadden attorney Jay Kasner is back on top--he argued and recently won the high-profile Dabit case for Merrill Lynch (discussed in detail here by The 10b-5 Daily) in the U.S. Supreme Court.  Kasner is still apparently on speaking terms with the WSJ, or at least the WSJ Law Blog.  In this post on the Law Blog, Kasner is quoted after his victory as stating:

One effect of the court’s decision will be that public companies will be able to access the U.S. capital markets without fear of securities class action litigation in 50 different states with 50 potentially different set of applicable laws.

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SLW Contest

We're still working on getting those SLW T-Shirts so no there's real prize, but Total Consciousness will be awarded to the reader who can answer this way-too-obscure question involving useless information:

What "SEC first" that launched a trend that continues to this day occurred on September 1, 1998?

Clue: It relates to the Enforcement Division and the answer lies in this SEC Litigation Release.

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31 Days Later...

From a Feb. 23 Bloomberg article:

Steven Schulman and David Bershad, partners in New York's Milberg Weiss Bershad & Schulman, were told by prosecutors that they will be indicted within the next month on charges they participated in a scheme to pay kickbacks to clients, Schulman's lawyer said.

Assistant U.S. Attorney Richard Robinson told Schulman and Bershad on Feb. 20 that they are facing indictment on wire fraud and money laundering charges over the fees, according to Edward Hayes, who represents Schulman in a federal criminal probe over the payments. Robinson told the two men they could be indicted in the next 30 days, Hayes said in an interview yesterday.

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March 21, 2006

Google Finance (Beta) Up and Running

A beta version of Google Finance is now up and running, and it has some tools that may be of use to securities litigators.  In particular, check out the charting function that integrates and plots news stories.  The charts are also interactive, and permit you to change the time window by simply sliding the arrow in the upper right corner of the chart.  This chart for Mills Corp., recently made a defendant in a securities class action, is a good example.  Stretch the chart out to see the bad news, the lawsuits that followed, etc.

In addition to news stories on a company, the site also aggregates blog posts, as well.  It also lets you search quickly for executives of a company in its specific context of finance/public companies, eliminating the million other search results you'd get if you plugged something like "Robert Iger" into Google.

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New Securities Litigation Blog: "Lies, Damn Lies, & Forward Looking Statements"

Welcome to Adam Savett and his new blog "Lies, Damn Lies, & Forward Looking Statements," which sets out to be "a look at the wide world of securities litigation from the eyes of a plaintiffs' attorney."

If Adam is half as good at blogging as he is at winning blog contests such as this and this, "Lies, Damn Lies..." should be great.

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SLW Lives, Part II

No, seriously.  I'm really not that sick anymore.  I'm going to start posting again soon.  Probably today.  There is no need for the "Save SLW" water towers, etc.  I'm fine.

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March 17, 2006

The Whistleblower Who Wasn't

The Houston's Clear Thinkers blog has this lively post excoriating Enron's Sherron Watkins, the "whistleblower" who really wasn't.

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March 13, 2006

SLW Lives

Sorry for the lack of posts here over the past week.  SLW was down and out with the flu, despite the fact that SLW got a flu shot.  But we're pretty much back in action, gathering strength, getting ready to post again when energy reaches "Blog Posting" levels (we're not there yet--energy currently has only reached  "Posting about the possibility of posting soon" level.  Big difference).

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March 7, 2006

AALS "Call for Papers"

The American Association of Law Schools Section on Securities Regulation is issuing a "Call for Papers" to both academics and non-academics interested in presenting at its Annual Meeting.  Details are below if you are interested:

AALS SECTION ON SECURITIES REGULATION

CALL FOR PAPERS
FOR JANUARY 2007 ANNUAL MEETING

The AALS Section on Securities Regulation will hold its seventh meeting during the AALS Annual Meeting in San Francisco, California from January 3-6, 2007.  (The Section meeting is tentatively scheduled for Saturday, January 6, 2007).

The Executive Committee invites submissions of abstracts for paper presentations at this upcoming meeting.  The Committee would prefer the theme(s) or topic(s) of the panel to be determined by the submissions we receive, rather than the other way around.  So please feel free to send an abstract on anything you are working on that relates to securities regulation.  The Section welcomes papers from a wide range of scholars and perspectives, including law and non-law scholars.

At least three papers will be presented, to be chosen from submissions made in response to this Call for Papers.  If you are interested in presenting a paper, please submit an abstract of no more than five pages by May 10, 2006.   Please direct your submission electronically (email) to:

Professor Stephen Choi
NYU Law School
e-mail:  stephen.choi@nyu.edu

Papers will be selected after review by members of the Executive Committee of the Section on Securities Regulation:

Authors of accepted papers will be notified by the end of May, 2006.

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"More Nations Open the Door to Securities Lawsuits"

ISS' Ted Allen has an excellent article in this month's SCAS Alert entitled "More Nations Open the Door to Securities Lawsuits."  The article, posted here on the ISS Corporate Governance Blog, breaks down on a country-by-country basis the discussion that took place at last month's webcast on non-U.S. securities class actions.

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March 3, 2006

The End of the "Rock Star" CFO

Brooke Masters of The Washington Post has this great article observing that the "age of the rock star chief financial officer is over."  The article states that while in the 1990s, CFOs "won praise and publicity for finding creative ways to massage their companies' finances to improve the bottom line and 'create shareholder value,'" today "corporate boards and institutional investors are inclined to value a straight-shooter with expertise in accounting who plays more of a supporting role."

The article also points out that of the 28 recipients of CFO Magazine's "Excellence Awards" between 1998 and 2000, two of the winners are in prison (WorldCom's Scott Sullivan and Tyco International's Mark Swartz), one is fighting an SEC insider trading case (David Willey, formerly of Capital One Financial Corp) and Enron's Andrew Fastow, the best known of all of them, has already pleaded guilty to conspiracy charges and is scheduled to testify soon in the ongoing case against Jeffrey Skilling and  Ken Lay.

The article also wryly notes that "[n]ot surprisingly, CFO Magazine has given up the practice of giving Excellence Awards. "

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The End of the "Rock Star" CFO

Brooke Masters of The Washington Post has this great article observing that the "age of the rock star chief financial officer is over."  The article states that while in the 1990s, CFOs "won praise and publicity for finding creative ways to massage their companies' finances to improve the bottom line and 'create shareholder value,'" today "corporate boards and institutional investors are inclined to value a straight-shooter with expertise in accounting who plays more of a supporting role."

The article also points out that of the 28 recipients of CFO Magazine's "Excellence Awards" between 1998 and 2000, two of the winners are in prison (WorldCom's Scott Sullivan and Tyco International's Mark Swartz), one is fighting an SEC insider trading case (David Willey, formerly of Capital One Financial Corp) and Enron's Andrew Fastow, the best known of all of them, has already pleaded guilty to conspiracy charges and is scheduled to testify soon in the ongoing case against Jeffrey Skilling and  Ken Lay.

The article also wryly notes that "[n]ot surprisingly, CFO magazine has given up the practice of giving Excellence Awards. "

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March 1, 2006

More on the Symbol Execs' "Mistrial"

Securities Law 360's Erin Marie Daly has this article ("Mistrial 'Unjust,' Say Attorneys For Symbol Execs") providing more details on the chaos (previously discussed here) that is the Symbol Technologies executives' criminal trial.

According to the article, one of the defense attorneys claims he sought permission from the court to poll the jury on “no fewer than three occasions” when the trial ended as to whether they had reached a verdict on any of the accused.  Prosecutors, however, say the attorney did so only after the mistrial motion had already been granted by the judge.

The article also contains the following passage quoting yours truly:

The defense's surprise move has baffled legal professionals, with court precedent for similar situations apparently murky, says Bruce Carton, vice president of Securities Class Action Services.

"I've never seen anything like this before," says Carton. "It's hard to believe that after a six-week trial, the jury's verdict could be so grossly misunderstood. The part that boggles my mind is that the jurors apparently came to the judge with a note saying they could not reach a decision. If you believe what the seven jurors are telling the defense lawyer, that note was completely misunderstood." If that is the case, says Carton, the situation amounts to a very unfortunate misunderstanding.

"If in fact the jury was trying to acquit, then somebody is at fault, and it's not the jury," he says.

In hindsight, of course, what I should have told the reporter here was, borrowing from the late Johnnie Cochran,

“If the jury votes for it…the Court must acquit!!”

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Enron Settlement Recovery Update: $7.89/Share and Counting

On February 22, a federal judge in Texas gave preliminary approval to a partial settlement of the Enron securities class action with three investment banks (Citigroup, JPMorgan Chase and CIBC) that will pay a combined $6.6 billion (see AP article here).

An article in the February 27 Texas Lawyer reports that this partial settlement alone will result in some sizeable recoveries for investors. According to the article, a class notice filed with the court states that the partial settlement, before fees and expenses, will provide about $7.89 for each common share of Enron stock. With banks such as Merrill Lynch & Co., Barclays PLC, Toronto-Dominion Bank, Royal Bank of Canada, Deutsche Bank AG and the Royal Bank of Scotland Group PLC still remaining as defendants in the case, this per share recovery figures to keep rising.

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