Category: Corporate

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Wall Street to Fraud Street: Disgruntled Investors Want Compensation

I. Introduction

With the financial crisis showing no signs of recovery many are worried about employment, job security, investments, and the overall economy. With the collapse of Lehman Brothers Holdings, the buyout of Merrill Lynch along with several other Wall Street firms, and the government bailout of American International Group, many are beginning to reevaluate and question Wall Street and the executives that run the corporations.[1] While the Bush administration was proposing a $700 billion bailout plan, investors began to point fingers at the wealthy corporate executives that pocketed millions of dollars while the companies they worked for crumbled.[2] Although there are several factors that played a part in the Wall Street crisis, investors are lining up to sue the executives with the deep pockets.[3] Two major issue at the center of heated discussion are: fiduciary duty and executive compensation.[4][5] 

II. Fiduciary Duty


A. Fiduciary Duty and Rise in Litigation

Corporate executives,

… Read the rest
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Salute Your Shorts

I. A Short Introduction

With the recent collapse of numerous financial institutions,
the practice of short-selling (“shorting”) has come under fire. Some authors have gone so far to claim that
the actions of short-sellers (“shorters”) are among the core reasons for the
current credit crisis.[1] In response to this outcry, the United States
has imposed temporary bans on the shorting of certain stocks, particularly the
stocks of firms in the banking and finance sector, citing the need to protect
investors and markets.[2] Furthermore, New York Attorney General Andrew
Cuomo has launched an investigation into shorters for allegedly spreading false
rumors in the financial market.[3] These enforcement responses prompt the question;
do shorters have a legitimate role to play in a fair and open market?

II. History, in Short

There is a
long history of animosity towards shorters. Following the collapse of tulip craze in the Netherlands in the 1630s,
England … Read the rest

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Enron and Citigroup Settle: MegaClaims Litigation Comes to an End

I. Introduction

In late March Enron Creditors Recovery Corp. ("Enron") settled its latest and final MegaClaim against Citigroup, the largest bank in the U.S. [1] Citigroup agreed to pay $1.66 billion to Enron over its alleged responsibility in Enron's downfall. [2] In addition, Citigroup is releasing $4.25 billion in claims against the Enron estate, including a $4 billion claim reserve established by the U.S. Bankruptcy Court for the Southern District of New York. [3] Citigroup denied any wrongdoing in its dealings with Enron, but stated that it settled solely to avoid the expense and uncertainty of litigation. [4] Trial was set to start in April. Initially, Enron had sought $3 billion from Citigroup, alleging that number represented the amount fraudulently transferred by Enron to Citigroup. [5] Enron contended that Citigroup, in particular, played a central role in its collapse. [6]

This settlement effectively put an end to the MegaClaims litigation. … Read the rest

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Is a Franchise for You? Making the Right Decision on Starting a Franchise

I. Introduction

Starting a franchise can be a lucrative business. However,
franchising is also an expensive start-up venture and can have
significant legal consequences if not done properly. This article will
first define a franchise and discuss the different types. It will then
discuss financing a franchise and the legal issues of starting a
franchise. Finally, the article will conclude by discussing the best
way to go about starting a franchise.

II. Defining Franchise

A franchise is "the right or license granted by a company to an
individual or group to market its products or services in a specific
territory." [1] In other words, franchising is similar to cloning a
business. [2] The process of buying a franchise involves renting the
franchiser's trademark and business model. [3] Most franchises, like
McDonald's and Taco Bell, are considered "turnkey" business
opportunities because all the purchaser needs to do it turn a
rhetorical … Read the rest

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Ambiguity In Contemporary Money Laundering Statutes

I. Introduction

At the end of last year, the United States Supreme Court granted a petition for writ of certiorari for the appeal of convicted felon Humberto Fidel Regalado Cuellar. [1] The Court's ultimate decision in the case of United States v. Cuellar will be of immense importance, and can have far reaching effects. The Cuellar case will allow the United States Supreme Court to give lower courts guidance in the proper interpretation of current statutes criminalizing money laundering. Currently, a plethora of crimes are in the penumbra of money laundering charges. Such aggressive interpretation and application of money laundering charges is troubling in light of its original purpose. Clearly, much has changed since the passage of the 1970 Bank Secrecy Act "BSA". [2] Furthermore, the meaning of money laundering has expanded to "cover almost any financial crime", and marks a far departure from its original conceptualization. [3] Should the Court … Read the rest

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Are Your Gift Cards Safe?

I. Introduction

On February 19th, 2008 the specialty retailer Sharper Image filed for bankruptcy under Chapter 11 and announced that it would no longer be accepting its gift cards. This came as a shock to consumers, who suddenly found their holiday gift cards worthless. "'That is typical of businesses that reorganize under Chapter 11 bankruptcy, which treats gift cards as a loan to the company, not as cash.'" [1] Chapter 11 allows for an automatic stay of recovery for any claim against the debtor that arose before the filing of the bankruptcy claim. [2] In response to this announcement, C. Britt Beemer, chairman of America's Research Group, projected that this would greatly affect Sharper Image's future. "'You will see a lot of frustration among customers. You basically stole [money] out of the customers' pocket. They will never forgive you.'" [3]

Just two and a half weeks later, on March 7, … Read the rest

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Worst. Journal Article. Ever.

I. It's All in Good Taste

Recently,
Northern Island’s Court of Appeal overturned a jury’s decision to award £25,000
to a pizzeria in Belfast in a defamation suit.[1] In this particular case, Irish News restaurant
critic Caroline Workman wrote a highly critical article of Goodfellas pizzeria,
which resulted in the pizzeria filing a defamation suit against Irish News,[2] While a jury found in favor of Goodfellas,
awarding the pizzeria £25,000, Northern Ireland’s Court of Appeal ordered a
retrial after finding the instructions to the jury were confusing regarding the
distinction between fact and comment.[3]

Cases like this have happened in the
United States and continue to happen today. While the differences between law in the United States and law in
Northern Ireland are multifarious, both nations have been faced with the
complicated legal issue of how to deal with restaurants bringing defamation
suits against their critics. U.S. courts
must delicately … Read the rest

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Should Complex Corporate Litigation Trials be Left to the Juries?

I.  Introduction

     Corporate litigation disputes are becoming
more complex as new issues arise addressing questions on statistical
and/or probabilistic facts, expert testimonies, and other intricacies
of the business world. This trend in litigation poses a new issue to
the courts, and, more specifically to the juries. With these issues
becoming more complicated, one can only wonder if lay jurors are able
to understand the disputes, judicial instructions, and are capable of
applying the facts to the law.


 
   Juries in their earliest form consisted of committees of qualified
persons in the community who provided assistance on facts or issues in
dispute. [1] By this time, these "jurors not only knew the litigants,
[but] they also knew something about the dispute." [2] Jurors were able
to conduct their own investigations among those who they believed had
knowledge of the facts. [3] "Today, however, any knowledge of the
dispute or

… Read the rest
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Law Firms: It’s Getting Easier to Be Green

I.    Introduction

The current surge in environmental awareness is affecting the way
our nation does business, across a variety of industries. [1]  The
United Nations Intergovernmental Panel on Climate Changes has come to
the unequivocal conclusion that our planet is getting hotter, and
former Vice President Al Gore’s popular documentary on global warming
has helped to create awareness about environmental issues. [2]   Beyond
any altruism towards the environment, law firms are discovering that
like any other business, they can ultimately profit by taking steps
that benefit the environment. [3]  This article explores the legal
industry's negative impact on the environment, and examines the nature
and origin of the sustainability, or “green,” movement throughout law
firms today.

II.    How Lawyers Affect the Environment

A study conducted by the United States Environmental Protection Agency
(“EPA”) has shown that a lawyer on average uses up to 100,000 sheets of
mostly virgin … Read the rest

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SBA Proposes Limitations on Set-Asides to Women-Owned Small Businesses

On January 30th, 2008 women's groups rallied in protest at a hearing held by the U.S. Senate Committee on Small Business & Entrepreneurship, chaired by Sen. John Kerry (D-Mass), regarding the Small Business Administration's (SBA) recent proposal to limit set-asides to women-owned small businesses (WOSBs) in federal contracting. These set-asides would be limited to four out of some 140 possible sectors in which women were underrepresented, as indicated by a recent RAND Corporation study. [1] Among the groups involved were the U.S. Women's Chamber of Commerce and National Association of Women Business Owners. According to Margot Dorfman, executive director of the U.S. Women's Chamber of Commerce, the RAND data can also be read to show that 87% of industrial sectors are underrepresented by WOSBs. [2]

The Clinton Administration recognized the relatively low success rate of WOSBs in winning federal contracts. In 1994 the Administration urged Congress to pass the Federal … Read the rest