My Privilege

Anyone who watches popular American legal TV shows such as “Law and Order” knows that what is said between clients and their lawyers is protected by “attorney-client privilege,” right? Well, maybe not, according to a ruling in September by Europe’s second-highest court.The case stems from a 2003 ...

By Laura Cameron • Nov. 5, 2007

How Low Can They Go?

Wonder whether your suppliers are truly giving you a good deal? Two professors who study online reverse auctions (in which buyers solicit bids and award their business to the low bidder) have devised a mathematical model that can assess whether a bid truly represents a seller’s best price.Describ...

By Alix Stuart • Nov. 1, 2007

Bitter Medicine

In an effort to curtail drug counterfeiting, some 21 states have passed “pedigree” legislation — laws that require the documentation of how drugs pass through the supply chain to the retailer. Much to the dismay of manufacturers, wholesalers, and retailers alike, California lawmakers will up the ...

By Lori Calabro • Nov. 1, 2007

Innovators’ Dilemma

New patent laws that go into effect this month are ostensibly designed to cut down on frivolous filings and a crushing applications backlog, but critics say they may have a chilling effect on innovation.Previously, any person or company filing a patent application was allowed to file an unlimited...

By Avital Louria Hahn • Nov. 1, 2007

Shareholders Unite to Hold Merrill Accountable

At least two class-action lawsuits have been filed on behalf of shareholders against Merrill Lynch and company officers and directors following the company’s recent $8 billion write-off and the subsequent “retirement” of its CEO. The lawsuits, brought by Coughlin Stoia Geller Rudman & Robbi...

By Stephen Taub • Oct. 31, 2007

SEC Clears PMC-Sierra of Backdating

PMC-Sierra, one of reportedly more than 200 companies implicated in the backdating scandal, is no longer the subject of a federal probe. Last week, the Securities and Exchange Commission told the semiconductor provider that the informal investigation into the company’s stock option practices is o...

By Sarah Johnson • Oct. 31, 2007

Dell Filings Are Back on Line

Dell is finally current with its regulatory filings. The struggling computer maker on Tuesday filed its past due reports for fiscal 2007, which include an amended report for the first quarter of fiscal 2007, as well as reports for the second and third quarters of fiscal 2007, and the first and se...

By Stephen Taub • Oct. 31, 2007

U.S. Botches Terror-Support List

The Securities and Exchange Commission’sattempt to publicize a list of companies with businessties to terrorist-sponsoring states caused quite a stirthis summer. The list of more than 90 companiesincluded a number of household names, fromAstraZeneca to Cadbury Schweppes to Reuters toXerox. Posted...

By Kate Plourd • Oct. 30, 2007

Risk Manager Settles Insider Charges

The Securities and Exchange Commission has settled insider trading charges against the former executive vice president of Countrywide Financial Corp.’s Portfolio Risk Management group. The commission alleged that Quan Zhu, who worked for the financial services firm from 1998 until he was fired in...

By Stephen Taub • Oct. 30, 2007

SEC Probe of Jones Soda Fizzles

The Securities and Exchange Commission has terminated an informal investigation of Jones Soda Co. and does not intend to recommend any enforcement action. The company said the probe related to trading by some company officers and directors.The SEC advised Jones of its decision in a letter receive...

By Stephen Taub • Oct. 29, 2007

Big Headache or Big Bang?

Attempts by Brussels to reform anything are not often greeted with shrieks of joy in the finance industry; the more usual reaction is either boredom or bitter complaints from those developing an unwanted intimacy with the compliance department. The reaction to a new law on financial markets, due ...

By Economist Staff • Oct. 29, 2007

Connecticut Goes after Ratings Agencies

The Attorney General of the State of Connecticut , Richard Blumenthal, has issued subpoenas to credit-rating agencies Standard & Poor’s, Moody’s, and Fitch as part of an antitrust investigation into the industry, he confirmed Friday in a statement.“The debt rating industry is a highly concent...

By Alan Rappeport • Oct. 26, 2007

No Protection Against Massive-Fraud Charges

The Justice Department indicted two former officers of a body armor company insider trading, fraud, obstruction of justice, and taxevasion. David Brooks, former CEO of DHB Industries, and Sandra Hatfield, former chief operating officer, already had been indicted for securities fraud in August 20...

By Stephen Taub • Oct. 25, 2007

PAC Man Heads Behind Bars

A former Lockheed Martin finance employee who oversaw the company’s political action committee was sentenced to 16 months in prison for stealing $160,000 and lying to a government agency. Kenneth Phelps III, who was deputy manager and treasurer for Lockheed’s PAC, had pled guilty in July to 12 c...

By Stephen Taub • Oct. 24, 2007

Appraising the Roof

Despite early predictions of an unusually active season, most hurricanecoverage this year (as of press time, anyway) has been devoted to Katrinaretrospectives rather than the chronicling of fresh disasters. If history is any guide, that means that most businesses will slipinto a reflexive complac...

By Scott Leibs • Oct. 19, 2007

Running a Close Race

Companies around the world race to close their books at the end of the year, but those in some places are having more success than others.A new study by BPM International and the Paragon Consulting Group, both British consultancies, compares the close times of firms in the United States, Britain,...

By Alan Rappeport • Oct. 19, 2007

CFO’s 25-Year Sentence Upheld on Appeal

A federal appeals court had upheld the 25-year prison sentence of the former chief financial officer of a Texas energy company. Jonathan Dwane Nelson, who last year pled guilty to embezzling $77 million from Patterson-UTI Energy, had argued that his prison term fell outside federal sentencing gu...

By Stephen Taub • Oct. 18, 2007

Swiss Misstep: SEC Charges 3 with Fraud

The Securities and Exchange Commission on Wednesday filed civil fraud charges against three former finance executives of a Swiss public company for allegedly misstating financial results. The three accused were Urs Kamber, former CFO of medical device maker Centerpulse Ltd.; former controller Ste...

By Stephen Taub • Oct. 17, 2007

A D&O Dilemma

Flashy settlements and harsh-worded rulings may rebuke corporate leaders, but they are unlikely to have an immediate impact on the price of the insurance that covers them. But continuing fallout from the subprime mortgage crisis could be another matter, experts say.High-profile decisions have tak...

By Alan Rappeport • Oct. 17, 2007

Fees Under Fire

Even as Congress examinescurrent 401(k) plan feestructures, companies mayhave plenty of incentive torevisit the issue now ratherthan wait for any resultinglegislative changes. Thatincentive comes in the form ofclass-action lawsuitslaunched against a number oflarge companies, including Lockheed Ma...

By Kate Plourd • Oct. 16, 2007

Keeping Shareholders in Their Place

“Having told everyone in the world that there is no such thing as shareholder democracy in America, and that to change things they had to do lawsuits, I now discover I can’t even bring a lawsuit,” complains Bob Monks. Last month a judge in Massachusetts ruled that Mr Monks could not lead a class-...

By Economist Staff • Oct. 15, 2007

Nortel Settles Fraud Suit with $35M

Nortel Networks announced Monday that it will pay the Securities and Exchange Commission $35 million to settle accounting fraud charges. The Canadian telecommunications equipment maker has not admitted or denied the SEC’s accusations but agreed to periodically update the commission on progress ma...

By Sarah Johnson • Oct. 15, 2007

Applebee’s Must Serve Up More Sale Info

Applebee’s International has agreed to settle a class-action lawsuit filed by a union that asserted the casual dining chain is better off independent than going through with its deal to be bought by IHOP.Under the agreement with the New Jersey Building Laborers Pension and Annuity Funds, which br...

By Stephen Taub • Oct. 15, 2007

Theft of Options Brings Stiff Sentence

Let this be a lesson to you: If you’re going to steal something, don’t forget to pay income taxes on it. A former stock options administrator was sentenced to 46 months in prison for wire fraud and tax evasion in connection with the theft of options. Vencent Donlan, formerly with Wireless Facil...

By Stephen Taub • Oct. 15, 2007

Amicus Interruptus

If boards are in bed with management, recentDelaware Chancery Court rulings may go some way towardpulling back the sheets. Recent decisions suggest that thejudges’ patience has worn thin when it comes to stockoptiondating games, executive perks, director conflicts ofinterest, and self-serving neg...

By Roy Harris • Oct. 15, 2007