Friday, July 07, 2006


Missed from yesterday, Boeing and DOJ entered into a non-prosecution agreement with some unusual features (See also WSJ Law Blog.):
In the agreement, which covers a two-year period, Boeing agrees not to commit any criminal offenses related to stealing of other companies' sensitive procurement information or the laws governing federal bribery, graft and conflict of interest.

But unlike the 50 or so corporate deferred and non-prosecution agreements that have preceded this one, Boeing's team of lawyers had inserted this item:

If a non-executive level Boeing employee violates the agreement, that's not a violation by Boeing.

In an update from yesterday, Judge Kaplan has declined prosecutors' invitation to tone down his opinion, which sharply criticized the government for pressuring KPMG to cut off legal fees to its employee-defendants: "In yesterday’s order, Judge Kaplan underscored his feelings on the issue, writing that the policy 'dutifully carried out' by the feds is 'more than a disappointment — it is unconstitutional.' He also refused Garcia’s request to strike from the opinion the names of the federal prosecutors involved in the case."

Speaking of which, CCR considers at what point SEC/DOJ cooperation is not permissible: "'But in addition to disclosure, Stringer and Scrushy suggest other factors that come into play,' Krakaur said. 'Did the U.S. Attorney suggest questions for the SEC to ask? Or are there questions that the U.S. Attorney wants the SEC not to ask? Is the U.S. Attorney calling the SEC and asking them to take testimony in one location as opposed to another for venue purposes? That might be viewed as another indicator as to whether the U.S. Attorney’s office is pulling the strings on how the SEC should conduct its investigation. In short, there are other circumstances that weigh in a court’s decision on whether the government agencies have interacted appropriately.'"

Two SEC commissioners appeared to offer somewhat conflicting views on options timing: "Speaking at an event in Washington, D.C. departing commissioner Cynthia Glassman said she believed that some stock-options backdating had been 'clearly illegal.' At a separate conference of institutional investors, Commissioner Paul Atkins said that the practice of springloading — setting a grant date and exercise price of an option just before the release of positive corporate news — should not be considered insider trading because 'there is no counterparty who could be harmed.' He went on to explain that the counterparty to an options grant is the corporation (i.e., the shareholders), which is intended to benefit from the decision."

Across the pond, the europeans begin pushback on data monitoring program: "The European Parliament demanded Thursday that European governments and European institutions in Brussels disclose how much they knew about a secret U.S. program to tap into international banking data."

Another data security breach: "A hacker broke into a University of Tennessee computer containing names, addresses and Social Security numbers of about 36,000 past and present employees, but university officials said Thursday that they doubt the data was used."

Southern Poverty Law Center to release report on hate groups' infiltration of the military: "A decade after the Pentagon declared a zero-tolerance policy for racist hate groups, recruiting shortfalls caused by the war in Iraq have allowed 'large numbers of neo-Nazis and skinhead extremists' to infiltrate the military, according to a watchdog organization."