April 13, 2004

Did I Speak Too Soon…SEC

It’s a coincidence I’m sure, but after I blogged yesterday about waiting for the SEC to notice the PCAOB’s rulemaking regarding attestations and internal controls – the SEC noticed it. There is a 21-day comment period.

The compliance date for accelerated filers to comply with the SEC’s requirements regarding management’s internal control report is the first fiscal year ending on – or after – November 15, 2004. The new attestation standard will apply to the annual audit for that fiscal year. Other dates apply for non-accelerated filers and foreign private issuers.

Company Sues Shareholder Proponent for Defamation

Back in January, as reported recently by the Atlanta Journal-Constitution, Cintas Corp. filed a defamation lawsuit against against Timothy Smith, SVP of the investment firm Walden Asset Management. Cintas alleges he made defamatory remarks at its October annual meeting.

According to the suit, Smith linked the company to a “sweatshop” factory in Haiti. He was urging passage of a shareholder resolution calling on Cintas to assess the effectiveness of its vendor code of conduct and the compliance of its factories and suppliers. Apparently, Smith declined to comment on the case for the Journal-Constitution, but Amy Domini of Domini Social Investments, which sponsored the resolution with Walden, said that Cintas had ignored numerous attempts to discuss this issue before the meeting. Cintas is asking for damages of at least $75,000, plus unspecified punitive damages – and also wants Walden barred from repeating his sweatshop comparisons.

I waited to blog about this lawsuit because it just doesn’t seem like it could really happen in this era of improved shareholder relations…I’m not sure that Cintas was thinking about the bigger picture of IR as this likely will draw negative press – and the ire of other investors – for some time to come.

Indemnification of Buyers in Acquisitions

The April installment of “Carl’s Corner” is up – regarding indemnification in acquisitions. As usual, Carl provides interesting commentary and annotated provisions. This is a topic that also has been addressed by the “Deal Guys Blog.”