ON Securities

I attended a compelling legal education program this week, taught by Egil “Bud” Krogh. Political junkies know that Krogh was a young assistant White House counsel in the Nixon years. As a leader of the “Plumbers” unit, he authorized the 1971 break-in of the offices of Daniel Ellsberg’s psychiatrist after the leak of the Pentagon Papers. After the break-in came to light in the Watergate hearings, Krogh pleaded guilty, served time in prison, was disbarred and later reinstated. Bud now lectures on the topic of legal ethics, based on his recent book, Integrity: Good People, Bad Choices, and Life Lessons from the White House. His premise: in a pressure-filled environment such as the White House, intense loyalty to individuals can blind you to your higher principles. . . . . Krogh’s description of an environment that can put pressure on decision-making is familiar to anyone called on to say yes or no to any proposal by a corporate officer. . . . [H]ow do some decisions, even decisions by good people, go astray? A great example can be found in the options backdating scandals. . . . I asked Krogh how to advise an attorney . . . how to avoid the pitfalls of losing perspective in a pressure-filled situation . . . . [to read more, click on the link above]

There was a fascinating article in the New York Times on Thursday about Merrill Lynch’s 2006 bonus program, which resulted in large payouts to top management even as the company was sold to Bank of America in a distressed sale. The author of the article provides more in-depth analysis in a post in the Times’ DealBook Blog. . . . The Blog post discusses the features of the plan that put a portion of the employees’ bonuses at risk, provided for a partial clawback if return on equity was not adequate, and invested the bonus amounts in stock that was locked up for a year past the three-year term of the plan. . . . I think the Merrill plan had many worthy features that should command the attention of compensation professionals. . . .Here’s a new one – The Corporate Counsel Blog reports that in-house corporate attorneys have joined the blogging world. . . . [to read more, click on the link above]

Occasionally, we will include guest columns with topics of interest to public companies and those that serve them. Here is a guest column by my colleague, Doug Holod. Doug is a partner in our Business and Securities Group and a member of Maslon’s Governance Committee. . . . “One universal theme that has become more pronounced during the current (past?) recession is the demand by businesses for value; everyone wants more for less. . . . Attached you will find a list that I prepared for businesses to reduce legal costs and maximize value . . . . [To read more, click on the title above]

I’ve been working on my outline for an upcoming continuing legal education program on how in-house counsel can help avoid or minimize securities fraud liability. I talked to Maslon’s securities litigation partner extraordinaire, Rich Wilson, about the topic, and we came up with the following tips. . . . The simple rule is to disclose material information in a way that’s not misleading. However, Rich cautions that a higher standard of disclosure may be required now. . . .