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Archive for the ‘Securities Class Action’ Category

Supreme Court to address question of “statistical significance” and materiality.

Wednesday, September 8th, 2010

Every Fall Kevin LaCroix, of the D&O Diary, compiles a list of current hot topics in the world of directors‚Äô and officers‚Äô liability.¬†¬† Of particular interest to me this year (more…)

Goldman Executives Are Expected to Testify Before Senate Panel

Thursday, April 22nd, 2010
Next Tuesday could be an interesting day on Capital Hill as Goldman sends in the troops to testify before Senate.    

Former KB Home CEO convicted in backdating trial

Wednesday, April 21st, 2010

LOS ANGELES ‚Äď The former head of construction giant KB Home was convicted Wednesday of four felony counts in a stock option backdating scam.

A federal jury in Los Angeles found Bruce Karatz guilty of two counts of mail fraud, one count of lying to company accountants and one count of making false statements in reports to the Securities and Exchange Commission.

Prosecutors claimed Karatz illegally backdated his stock options between 1998 and 2005 while he was chairman and chief executive of KB Home.

A stock option allows an employee to purchase a company’s stock at a preset price at a future date. Karatz retroactively tied the exercise price of his options to dates when the stock was selling for a low price, which increased his profit when he sold the shares.

The maneuver is legal if it is properly accounted for and disclosed to investors. Otherwise, it can allow companies to overstate profits and underpay taxes.  

See full article at: http://news.yahoo.com/s/ap/20100421/ap_on_bi_ge/us_kb_home_backdating

SEC Charges Goldman Sachs with Fraud in Structuring and Marketing of CDO Tied to Subprime Mortgages

Tuesday, April 20th, 2010

Washington, D.C., April 16, 2010 ‚ÄĒ The Securities and Exchange Commission today charged Goldman, Sachs & Co. and one of its vice presidents for defrauding investors by misstating and omitting key facts about a financial product tied to subprime mortgages as the U.S. housing market was beginning to falter.

Value of Securities Class Action Settlements Increased to $3.8 Billion

Tuesday, March 30th, 2010

On March 24, 2010, Cornerstone Research released its annual study of Securities Class Action Settlements.   The report written by Ellen M. Ryan and Laura E. Simmons  can be found at http://www.cornerstone.com. 

Key Findings:  The value and number of settlements increased in 2009 compared to 2008.   In 2009, there were  103 court approved settlements for an average settlement amount of $37 million  compared to 97 settlements for an average settlement amount of $28 million in 2008.  The median settlement in 2009 was $8 million, unchanged from 2008.  Almost 60% of post reform (1996 Р2009) act cases have settled for less than $10 million; 80% settled for less than $25 million.

Fun Fact:   securities fraud cases typically settle three to five years after the first complaint is filed.