SECURITIES LITIGATION / CORPORATE GOVERNANCE
We place a premium on enhancing shareholder value. Recovering assets our clients lose because of corporate wrongdoing is one way this can be accomplished. Ensuring that a company adheres to strong corporate governance standards is another.
At SRK, we seek to infuse corporate governance enhancements into our overall class action strategy. These measures are designed to help ensure that the future conduct of a company’s officers and directors will be in the best interest of its shareholders. The following are examples of governance enhancements obtained by SRK:
- In the Archer Daniels Midland action we negotiated broad changes in the company’s board structure that were designed to strengthen its independence and diversity. These changes encompassed defining what constitutes an independent director and ensuring the inclusion of women and minorities on the board. We also created corporate governance and regulatory oversight committees at the board level and required the board to retain outside counsel to provide independent oversight of these committees. In addition, we created a vehicle requiring company directors to attend educational seminars to better understand their fiduciary obligations as directors. A leading corporate governance expert called these reforms “state of the art.”
- In the Parmalat action we not only returned monies to investors, but also demanded and obtained an agreement by certain banks to adhere to key corporate governance principles designed to advance investor protection and minimize future misconduct – the first securities fraud action in which corporate governance reforms were achieved from a defendant beyond the issuer.
- In the Pacific Enterprises derivative action, we negotiated a settlement that required a quasi-reorganization of the company, new guidelines on future diversification from its core businesses, and reinstatement of the company’s dividend.
- In the Chicago Bridge action, we required implementation of governance measures to allow proper monitoring of insider trading in order to increase transparency for investors and promote better regulatory compliance.
- In the Abbott Laboratories action we required the company to implement corporate governance reforms to strengthen the board of directors’ oversight of regulatory compliance, and required it to contribute $27 million to fund such compliance and regulatory measures.
- In the Bristol-Myers Squibb action we required the company to implement numerous substantial governance enhancements to prevent future misconduct. These included various measures relating to the audit committee, the criteria under which directors are considered for reelection, the rotation of committee members on a periodic basis, and reports by the chief compliance officer and chief risk officer regarding ethics and non-financial compliance.
- In Shaev v. Sidhu, we negotiated a settlement that entailed significant corporate governance reforms, including arriving at a definition of what constitutes director independence in the context of voting on transactions being considered by the company.
- In the El Paso action, we obtained extensive corporate governance enhancements, including changes to the composition of the board of directors, appointment of key management positions, the adoption of corporate governance guidelines, and the formation of ethics and disclosure committees.
Our corporate governance focus begins not when a case approaches settlement, but rather when it is filed. As part of our portfolio monitoring service, we incorporate into our case analysis whether the absence of good corporate governance principles may have helped precipitate the fraud in question and whether the implementation of such principles may help deter future wrongdoing.
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