Corporate Governance Litigation: 2006 Review

This post comes to us from John L. Reed of Edwards Angell Palmer & Dodge.  John has previously posted here.

Directors & Boards magazine recently launched the inaugural edition of its annual report, The Year in GovernanceThe 2007 report provides a comprehensive timeline of key developments and includes articles on a range of subjects, including a report card assessing the SEC’s regulatory activities, a summary of the 2007 proxy season, a “heads up” on the “next big blowup” in securities litigation, a summary of several critical legal rulings in 2006, and a preview of what we can expect in 2007.

My article in the report, Corporate Governance Litigation: 2006 Review, discusses cases clarifying the duty of good faith, the applicability of business-judgment protection for certain controlling-stockholder transactions, the (un)availability of direct claims brought by creditors, and whether a company can turn its back on paying for the defense of its officers and directors to demonstrate cooperation with an ongoing investigation.  In a brief introduction to key developments in 2007, the article also notes that several stock-option backdating cases have survived early motions to dismiss.  The article begins:

Although not a year of Enrons or WorldComs, 2006 was an extremely active year on the securities and corporate governance fronts, and directors of publicly traded corporations faced a variety of significant challenges.  Highlighted by the wide-ranging stock option backdating scandal and a host of legal, accounting, and tax issues, an unprecedented number of companies found themselves in the unwelcome spotlight of the national media, government enforcers–both civil and criminal–and an energized plaintiffs’ bar purporting to represent stockholders.

The full article is available here.

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