The the news of the day is that GPIF is suing Toshiba for ＄１０ million． It is only one asset manager that is suing, almost certainly under Article 21-2 Japan securities law (FIL) which makes it very easy for plaintiffs to sue and claim a “presumed damages amount”, and then shifts the burden of proof to the defendant company (unlike US law) to disprove its negligence. The stock has come down by about 26% or so. (Interestingly, Japanese securities law in this area is much harsher than US law, which never shifts the burden of proof in such cases.)
Category: Law
Prof. Sean J. Griffith: ”Corporate Governance in an Era of Compliance”
”Abstract: Compliance is the new corporate governance. The compliance function is the means by which firms adapt behavior to legal, regulatory, and social norms. Formerly, this might have been conceived as a typical governance matter to be handled at the discretion of the board of directors. Compliance, however, does not fit traditional models of corporate governance. It does not come from the board of directors, state corporate law, or federal securities law. Compliance amounts instead to an internal governance structure imposed upon the firm from the outside by enforcement agents. This insight has important implications, both practical and theoretical, for corporate law and corporate governance. This Article pairs a detailed descriptive study of the contemporary compliance function with a normative account of its incompatibility with current conceptions of corporate governance. It argues that compliance alters the political economy of American business, challenges governance efficiency, and makes old theories of the firm new again. Prescriptively, the Article calls for greater transparency and a more limited role for government in designing corporate governance mechanisms………”
”MMC’s culture of disregarding legal compliance behind data falsification”
The Yomiuri Shimbun:
”Mitsubishi Motors Corp. was found to have manipulated data to overstate the fuel economy of minicar models.
Fuel efficiency is an important element for consumers to consider when they buy cars. Falsification of such data is an extremely malicious act.
MMC overstated the fuel economy by 5 percent to 10 percent by intentionally underestimating figures concerning tire resistance and other resistance while the vehicles are in motion.
Hoang C. C. et al : ”Institutional Investors and Trends in Board Refreshment”
”As many institutional investors have concluded, prevailing governance policies and practices have not produced desired board refreshment, which these investors would support in order to strengthen expertise, promote diversity and provide fresh perspectives in the board room. At the same time, companies and investors alike appreciate that term and age limits, as they have been typically applied, may not be the solutions, because they force the arbitrary retirement of valuable directors.
The Recorder: ”DOJ Sweetens Rewards for FCPA Cooperation”
”SAN FRANCISCO — The U.S. Department of Justice on Tuesday launched a pilot program that could significantly reduce the criminal penalties for companies that self-report violations of the Foreign Corrupt Practices Act.
Daniel E. Wolf et al ：”Social Covenants in Mergers: Legal Promises or Moral Commitments?”
‘With the return of acquirer stock as a featured form of consideration in many recent deals, dealmakers are once again focusing on “social” issues in striking a merger agreement. As compared to most straight cash takeovers where price garners the overwhelming share of, if not exclusive, attention, an acquisition featuring stock consideration, and especially a so-called merger-of-equals, often involves significant discussion between the parties of softer issues, including governance, board composition, management, people, and corporate identity (e.g., corporate and brand names, headquarters and facility locations, and charitable and community commitments). A number of deal developments over the last few years highlight some of the risks and considerations unique to these social terms.
Gary Giampetruzzi et al ”Another Life Sciences Company Gets Hit Hard: Olympus Pays $646M to Resolve Corruption Allegations in a Unique Dual FCA / FCPA Resolution”
”Demonstrating the continued focus of the Department of Justice (“DOJ”) on the life sciences industry, on March 1, 2016, the U.S. Attorney’s Office for the District of New Jersey (“USAO”) announced a major settlement with Olympus Corporation of the Americas (“Olympus”), the U.S. subsidiary of Olympus Corporation, a Japanese company and the largest U.S. distributor […]
”Japan changes tax treatment of D&O liability insurance premiums”
”Japan’s National Tax Agency (NTA) has announced a new tax treatment of premiums for directors’ and officers’ liability insurance.
US Department of Justice (Speech at Yale): ”Individual Accountability for Antitrust Crimes”
”………….Last year, the Antitrust Division obtained over $2.5 billion in criminal fines from financial firms prosecuted for antitrust violations in the foreign-currency exchange spot market. Although the fines imposed in that investigation were the largest ever obtained by the Division, we have obtained substantial fines in other investigations. Our automobile parts, air transportation, and LCD investigations, which collectively resulted in more than $5 billion in fines, are just a few examples. Foreign competition enforcers, such as the Directorate General for Competition in Europe and the Council for Economic Defense in Brazil, have also imposed very large fines for cartel violations.
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Such fines have occasionally sparked a debate about whether corporate accountability and corporate fines are a meaningful punishment for antitrust crimes. For instance, I participated in a panel discussion on this topic at the Bundeskartellamt’s Berlin Conference last year. During the discussion, a panelist provocatively suggested that competition enforcers are “drunk on fines” and suggested that corporate fines are not serving their intended deterrent purpose.
Congressional Research Service： “Obstruction of Justice: An Overview of Some of the Federal Statutes That Prohibit Interference with Judicial, Executive, or Legislative Activities”
”…………….Obstruction of justice is the impediment of governmental activities. There are a host of federal criminal laws that prohibit obstructions of justice. The six most general outlaw obstruction of judicial proceedings (18 U.S.C. 1503), witness tampering (18 U.S.C. 1512), witness retaliation (18 U.S.C. 1513), obstruction of congressional or administrative proceedings (18 U.S.C. 1505), conspiracy to defraud the United States (18 U.S.C. 371), and contempt (a creature of statute, rule and common law).