March 22, 2005

Conflicts of Interest in M&A

On Sunday, the NY Times ran this article about conflicts of interest in M&A transactions, with a particular focus on fairness opinions as the NASD is in the process of reviewing comments on its proposed reform. Author Andrew Sorkin concludes, “Wall Street may initially blanch at these reforms, but they could turn out to be a boon for business: companies are more likely to ask for second and third opinions from different banks just to cover themselves – and that could produce fairness opinions that are really fair.”

Don’t forget that on April 20th, our star-studded panel will cover fairness opinions and much more in this webcast – “Conflicts of Interest and Dicey Engagements” – featuring Peter Douglas of Davis Polk; Brian McCarthy of Skadden, Arps; Kevin Miller of Credit Suisse First Boston; and Morton Pierce of Dewey Ballantine.

Confidential Treatment Requests for Material Contracts

Members tell me that the SEC Staff continues to take a proactive approach in its review of confidential treatment requests for information contained in material contracts and arguably has recently enhanced its scrutiny in determining what may be kept confidential. Learn more in this interview with Jim Ball and Ellie Kwack on CT Requests for Material Contracts.

Time Warner Pays $300 Million to Settle SEC Fraud Action

Yesterday, the SEC charged Time Warner with materially overstating online advertising revenue and the number of its Internet subscribers, and with aiding and abetting three other securities frauds. The SEC also charged that the company violated a Commission cease-and-desist order issued against AOL in 2000. In a separate administrative proceeding, the SEC charged Time Warner’s CFO, Controller, and Deputy Controller with causing violations of the reporting provisions of the federal securities laws.

Time Warner settled its charges for a whopping $300 million (which is in addition to a separate $210 million settlement reached in December with the Justice Department) and the 3 officers entered into cease & desist orders, while the investigation continues into other entities and persons. The company also agreed to restate its financials and engage an independent examiner to determine whether the company’s historical accounting for certain transactions was in conformity with GAAP.