Corporations and securities brief ~ Adelphia nears settlement with DOJ, SEC
Amit Patel at 12:21 PM ET
[JURIST] Leading Thursday's corporations and securities law news, Adelphia Communications Corp. [corporate website] is reportedly close to settling claims made by the US Department of Justice [official website] and the SEC related to the massive accounting and management scandal at the company. Adelphia will pay about $725 million making it one of the largest penalties paid in recent years. The claims arise from the cable company's collapse in 2002 amid claims the company's founders used millions of dollars of company funds for personal use and misrepresented its financial condition. Investors have lost billions of dollars due to the collapse. Reuters has more. In related news, Adelphia founder John Rigas [Wikipedia profile], and his son, who were convicted of fraud and conspiracy last year, have had their sentencing postponed by a federal judge until April 18. Read the Rigas indictment [PDF]. Read the SEC complaint against Adelphia and Rigas. AP has more.
In other news...
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- A Florida court has ruled that Morgan Stanley [corporate website] helped Sunbeam Corp. inflate its financial condition as it was pursuing a takeover of Coleman Co. in 1998. According to the lawsuit brought by Coleman, Morgan Stanley knew or should have know about Sunbeam's deteriorating financial condition. Coleman is asking for almost $900 million in damages which could be tripled under the state court's rules. Reuters has more.
- San Diego's District Attorney's Office [official website] has informed top officials at City Hall that it launched a criminal probe into the city's pension system and its 13-member board of trustees. The focus of the probe relates to pension board votes in 2002 in which a majority of trustees, including several city employees, endorsed a plan to let the city underfund the retirement system. The San Diego Union-Tribune has more.
- Timothy Despain, a former Enron assistant treasurer who pleaded guilty to conspiracy [plea bargain, PDF] for participating in a scheme to falsely claim cash flow of at least $5 billion at Enron [corporate website; JURIST Hot Topic news archive], had his sentencing postponed for a year from now to March 2006. The judge reset the sentencing date because Despain is cooperating with prosecutors and is a potential witness in the trial of other Enron defendants. Read the charges against Despain [PDF]. The Houston Chronicle has more and continuing coverage of the Enron trials.
- Kmart Holding Corp. [corporate website] shareholders have approved the company's acquisition of Sears, Roebuck and Co [corporate website]. The $11 billion deal is part the combined company's plan to reverse lagging sales. AP has more.
- As previously reported in JURIST's Paper Chase, a French appeals court found billionaire investor George Soros [official biography] guilty of insider trading upholding a 2002 conviction. The court ruled Soros broke French insider trading laws when he purchased shares of Societe Generale SA shares with the knowledge that the bank may be a takeover target. The court ordered Soros to pay back his 2.2 million euros in gains. Bloomberg has more.
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