News 2000
 


October 13 | October 4 | September 27 | September 7 | August 31 | June 6, 2000 | April 25 2000 | March 2000 | February 2000


October 13, 2000

  • The Center for Business Ethics at the University of St. Thomas in Houston has recently published “Corporate Governance: Ethics Across the Board.” Marianne Jennings, the Director of the Lincoln Center for Applied Ethics at Arizona State University, wrote an article titled “Stakeholder Theory: Letting Anyone Who’s Interested Run the Business – No Investment Required.”
  • The Second Circuit Court of Appeals held that a corporate officer can waive privileges even if the corporation has expressly refused to waive them. A corporation’s founder, chairman, and controlling shareholder testified individually and not as the corporation’s representative regarding the company’s potential facilitation of firearm sales. He knew that the company had asserted attorney-client and work-product privileges and therefore knew he was not allowed to divulge privileged communications. However, he made references to counsel’s advice during his testimony before a grand jury. (In re Grand Jury Proceedings United States v. Doe, 2d Cir., No. 99-6311).


October 4, 2000

  • By an 8-1 vote, the Supreme Court sent the Microsoft antitrust case to a federal appeals court. A final decision on whether Microsoft must be broken up could be years away. The Justice Department had wanted the nation's highest court to hear arguments this winter and issue a ruling in the spring, but the justices granted Microsoft's request to send the case to the federal appeals court. Justice Stephen G. Breyer dissenting, saying the Court should hear arguments now because the case ``significantly affects an important sector of the economy - a sector characterized by rapid technological change.''

 

September 27, 2000

  • Cato Institute Adjunct Scholar Richard B. McKenzie writes in his recently published Policy Analysis that the central claim against Microsoft – that 70,000 software programs for Windows create an “applications barrier to entry” into the operating system – is entirely baseless. He writes, “The overwhelming majority of the 70,000 Windows applications that make up the supposed impregnable barrier to entry either never existed as unique products, no longer exist, or are totally out of date.” To view his study, visit: http://www.cato.org/pubs/pas/pa-380es.html
  • The Wall Street Project, an affiliate of Rev. Jesse Jackson’s Rainbown/PUSH Coalition, continues to antagonize a number of companies in which it has purchased stock – and has been credited by Business Week with increasing the number of African American Directors. Rev. Jackson opposed the MCI WorldCom and Sprint merger. He testified to the FCC that “The proposed merger will result in increased concentration of market power and will demolish competition in the domestic long distance market. The proposed merger will result in higher prices to low-income consumers and will harm immigrant and minority consumers of international long distance services.” Rev. Jackson also met with officials of Coca-Cola, including the Chairman, to discuss the possibility of a fast and appropriate settlement of a racial discrimination lawsuit against the company. The state comptroller of New York’s pension fund, which owns more than 7.4 million shares in Coca-Cola, also sent a letter to the Chairman urging a quick settlement.” The Rainbow/PUSH Coalition also held a conference in East Palo Alto to explore strategies for closing the “digital divide.” Business leaders attending the event included Carly Fiorina, the CEO of Hewlett Packard, John Chambers, CEO of Cisco Systems, and Craig Barrett, CEO of Intel. More than 700 industry government, education, and community leaders came together for the event. Intel contributed $100,000 to cover costs for the conference. Rev. Jackson also attended General Motors June 6 annual meeting and called on the company to practice minority inclusion. Among the Rainbow/PUSH Coalition’s concerns are that none of GM’s revenue producing segments is headed by a minority executive. Rainbow/PUSH’s research shows that in dealerships, procurement of goods and professional services, minority owned businesses account for 5 percent or less of General Motors total spending.

September 7, 2000

  • Will the Net Turn Car Dealers into Dinosaurs? State Limits on Auto Sales Online
    By Solveig Singleton
    Protectionism does not help consumers. This study discusses the various state laws that are in place in the name of the consumer, but in reality only protect the middleman. It is conceded that every company has a right to be in business, but not that there should be laws to ensure that they can continue to operate in the same way. The Internet is changing the way people do business, and states are attempting to apply old laws to new business models. Also, due to the interstate nature of the Internet, these state laws may be construed to be violating the commerce clause of the Constitution. Local dealers will not be run out of business due to their local service ability. States should not fear this new development in technology and allow competition to take place. See: http://www.cato.org/pubs/briefs/bp-058es.html


August 31, 2000

  • The Cato Institute is holding it Technology & Society conference from November 9-10 at the Hyatt Regency in Reston, Virginia. The conference brings together CEOs of the nation's leading high tech entertainment companies to explore the challenges the industry is facing with regard to intellectual property, free speech, and free trade.

 

June 6, 2000

  • DOJ and FTC issued the final version of Antitrust Guidelines for Collaborations Among Competitors to provide "an analytical framework to assist businesses in assessing the likelihood of an antitrust challenge" to joint ventures, strategic alliances, and other competitor collaborations. The 35-page document is at on April 7 at http://www.ftc.gov/os/2000/04/

April 25, 2000

  • The Internet is fundamentally changing the way in which securities are distributed, both in public offerings and in private placements. The SEC, the securities industry and the private bar are struggling to understand how the current regulatory structure will change to accommodate these changes. Click here http://www.fsweb.org/internetbroker.htm for a library of the leading authorities on how the Internet will change securities regulation.


March 2000

  • Last month we flagged the Delaware Court of Chancery's then-upcoming opinion in Chesapeake Corporation v. Shore as one to watch because of the counterclaim under DGCL Section 203. The opinion is now out, and it is a blockbuster, not only because the Court rejected the claim under Section 203 but because of its reinterpretation of Unitrin, Inc. v. American General Corp., 651 A.2d 1361 (Del. 1995). Vice-Chancellor Leo Strine, who issued the opinion in Chesapeake, took another swipe at the fiduciary duty standards governing target company boards of directors in a hostile takeover contest in In re Gaylord Container Corporation Securities Litigation. His critique of Unocal v. Mesa Petroleum, Inc., 493 A.2d 946 (Del. 1985) promises to reignite the debate over proper standards. For this and other recent Court of Chancery opinions, check the Delaware Corporate Law Clearinghouse, http://corporate-law.widener.edu/. Meanwhile, the Delaware Supreme Court has not been idle. On February 9, the Court issued its opinion in Brehm v. Eisner, the case challenging the compensation package awarded by The Walt Disney Company to Michael Ovitz, former president of Disney. The Court reversed the Court of Chancery on plaintiff's claims for breach of fiduciary duty and waste, allowing the plaintiffs to replead.
  • The lead plaintiff provisions of the Private Securities Litigation Reform Act of 1995 are attracting the SEC's attention in Moore v. Network Associates. Last fall, Judge Alsup of the Northern District of California held, among other things, that aggregated unrelated investors could not serve as group entitled to lead plaintiff status. See In re Network Associates, Inc. Securities Litigation, 76 F. Supp. 2d 1017 (N.D. Cal. 1999). The case is now on appeal before the Ninth Circuit, and the SEC has filed an amicus brief. .
  • The SEC recently announced that it has charged 19 defendants with insider trading. According to the SEC's press release - which touts this as the first case "Charging Use of Internet to Pass Inside Information" - the defendants "engaged in a widespread insider trading scheme that produced more than $8 million in illegal profits from trading in the securities of 23 public companies."
  • The SEC released a report on day-trading firms on February 25. The Report stated, "While the Staff's examinations did not reveal widespread fraud, examiners found indications of serious securities law violations warranting referrals to the SEC's Enforcement staff at several firms." For the full text of the report, see http://www.sec.gov/news/studies/daytrep.htm.
  • The latest issue of The Business Lawyer (Nov. 1999) has a long article on "The Merger Wave: Trends in Merger Enforcement and Litigation," by Richard Parker, the new Director of the FTC's Bureau of Competition, and David Balto, an Assistant Director. In a speech on February 17, Robert Pitofsky, Chairman of the Federal Trade Commission, described the standards used by the FTC in reviewing restructuring proposals. Pitofsky stated, "My intent today is not to describe a new or revised policy, but only to describe what we are doing, and have been doing, for some time." Nevertheless, the speech was widely viewed as an important warning that the FTC may be looking at restructuring proposals more critically in the future. For the text of the speech, see http://www.ftc.gov/speeches/pitofsky/restruct.htm.
    If you have been following the merger of BP Amoco P.L.C., and Atlantic Richfield Company, check of the FTC's Web site for the text of pleadings. See http://www.ftc.gov/os/bpamoco/index.htm.

February 2000

  • The AOL/Time Warner has predictably generated a stockholder suit for breach of fiduciary duty. The complaint in that case -- filed the day the merger was announced -- can be found at: http://corporate-law.widener.edu/documents/complaints/17719-001.pdf
  • The recent counterclaim in Chesapeake Corporation v. Shore challenges actions of the plaintiffs under DGCL Section 203. This case -- which promises to be the first substantial litigation over Section 203 -- explores the extent to which a hostile acquiror can lock up the votes of target shareholders without becoming an "interested stockholder" for purposes of Section 203. The brief describing the Section 203 claim can be located at: http://webman.widener.edu/documents/briefs/17626-127.pdf
  • The Microsoft antitrust litigation is heating up again. The full text of Microsoft's recent response to Judge Jackson's conclusions of law as well as the reply can be found at: http://www.usdoj.gov/atr/cases/ms_index.htm
  • The Securities and Exchange Commission recently ordered securities markets to begin quoting securities prices in decimals by July 3, 2000. For the text of the order, see: http://www.sec.gov/offices/marketr/34-42360.htm
  • The Securities & Exchange Commission recently adopted new rules governing audit committees and requires auditor review of quarterly financial information in Form 10-Q's. The new rules are located at: http://www.sec.gov/rules/final/34-42266.htm
  • The Securities & Exchange Commission recently adopted new rules exempting foreign takeovers and exchange offers from SEC regulation provided US ownership is 10% or less. The new rules are located at: http://www.sec.gov/rules/final/33-7759.htm
  • Andover.Net recently went public using OpenIPO, Hambrecht & Quist's dutch auction technique. For the story, see: http://www.upsidetoday.com/texis/mvm/open_season?id=3884ff6b0
   
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