Everywhere in the media there are stories about corporate lawsuits: shareholders vs corporations, regulators vs corporations, corporations vs corporations… Mom-and-pop investors are now blaming brokers and analysts for their portfolio losses. Populist juries are exacting punishment against entire industries such as tobacco and guns. Even if there’s no-one specifically to blame, the plaintiffs line up. Sometimes it seems that half the world is suing the other half and the only ones left standing are the lawyers. God bless America.
If the law is indeed a set of rules that allows people to sleep peacefully, these lawsuits are enough to turn even the most exhausted IRO into an insomniac.
I recall a well-known character in Delaware courts: ‘Ten-share’ Harry Lewis (may he rest in peace). Harry allegedly bought ten-share positions in 500 companies – technically becoming an owner of each – and gave his deposition to any case brought against them. I guess he made a decent living for himself. Old Ten-share Harry would swell with pride if he saw all the cases in the news these days.
And it’s not just cases like those of Microsoft and Ford/Bridgestone that get all the ink. It seems we have an unending fascination with all things litigious, right down to the small-time slander and cybersmear suits. Why? For the same reason Hollywood’s courtroom fascination has outlived all other tinseltown genres: These stories have the same glorious building blocks as classical Greek drama – ideological clashes, high stakes and a damn good soapbox for heroic speechmaking.
The SEC, like a dutifully busy bee, tends to its rulemaking hive, writing and revising concept releases, proposed rules, final rules, interpretive releases and policy statements; the NYSE, NASD and other self-regulating organizations come up with their own rules that sometimes contradict those of the SEC; and if that wasn’t enough, industry groups such as the SIA, AIMR and FASB propose their own unique blend of rules and rule amendments. Even in ‘plain English’, that’s a lot of footnotes. In fact, the role of corporate counsel is to make sure the corporations follow these painstakingly defined rules to the letter. They don’t want to become the latest media fascination.
What does it all mean for IR people? Your corporate counsel is your friend. The number of shareholder lawsuits may be slowly dropping, but there are still enough to keep you – and your accountants – awake at night. As the saying goes: Old lawyers never die – they just lose their appeal. Read on…
