law week7

PLEASE NUMBER OF AN ANSWER FOR ME

Resolve Your Dispute in Our Court System v. Alternative Dispute Resolution (graded)

Given the current backlog of civil cases in our federal, state, and county court system, and the ever increasing cost of litigation, many people facing disputes among themselves or with various organizations are electing to go to alternative dispute resolution (ADR). The most common means of ADR are arbitration, mediation,and mini-trials (Judge Judy), but a number of other types ADR are available. Pursuing a major civil case in county court will probably take three Years to complete and cost $_00,000. On the other hand, arbitration will probably take 60 days, and cost $30,000 - $50,000. So, you are facing a dispute with your former employer of 25 years, who is trying to deny you certain benefits that you gained legal title to (you think) over these years of employment.

1.What choices do you have in pursuing your claim for past employment benefits?

2.What are the various factors you need to consider in choosing a route to recovery?

3.You are very confident you will prevail at the end of the process, and recover your benefits. So, what action do you pursue?

SOX and Insider Trading - Problem 23-13, page 670 in your text (graded)

Review problem 23-13, found on page 670 of your eBook. Let's look at corporate malfeasance, both specifically as it is seen in the case of Mr. Bleakney and NMC, and more generally, at companies across the country. It seems as though there is an outbreak of corporate "bad ethics" that is translating into escalating costs for compliance and policing. Along with the SEC and their policing and efforts at ending bad business practices that relate to the stock market, we also have the Sarbanes-Oxley Act, also known as SARBOX, or SOX, which is becoming a big buzzword in the business world. We will look at that here and in the other topic. As part of that discussion, start thinking about the ways different officers of the company will look at and use or follow SOX (i.e., the CEO, CIO, and CFO).

1. To start this discussion, let's look at the conduct of Mr. Bleakney: Was his conduct illegal under the Securities and Exchange Act, and more specifically, Section 10(b) and Rule 10b-5? If so, how?

· 1.1 If his conduct was not illegal under Section 10(b) and Rule 10b-5, explain why not.

· 1.2 Was his conduct unethical? Why or why not?

2. If Mr. Bleakney is able to avoid prosecution under the 1934 Securities and Exchange Act, will he be subject to prosecution under Sarbanes-Oxley?

Ploblem 23-12

The Todman & Co. accounting firm audited the financial statements of Direct Brokerage, Inc. (DBI), from 1999 through 2002. Each year Todman issued an unqualified opinion that DBI’s financial statements accurately portrayed DBI’s finances. In fact, DBI failed to pay its payroll taxes for 1999 or 2000, a fact that came to light in 2003. After DBI collapsed in 2004, investors sued Todman, alleging that Todman was aware of DBI’s undisclosed liability and its need for an infusion of capital but failed to correct or withdraw its 2002 certified opinion or to advise DBI to withdraw its financial statements. The plaintiffs identified five red flags:

• In 1998, a Todman auditor noted a “large payroll tax payable at the end of the year” further analysis, but no analysis was ever done.

• Todman did not investigate DBI’s failure to pay any payroll tax after June 1998.

• Todman knew that DBI’s payroll taxes dropped from $248,899 to zero between 1998 and 1999, but never investigated.

• Todman knew that DBI’s employee compensation rose significantly in 1999 while its payroll taxes plunged, but did not investigate.

• That trend continued in 2000, and Todman knew it but did not investigate.

Did Todman violate Section 10(b) or Rule 10b-5? Overton v. Todman & Co., 478 F.3d 479 (2nd Cir. 2007).