Corporate Securities Law Blog

In December 2004, the SEC and The Walt Disney Company settled charges that Disney had failed to disclose timely relationships between Disney and certain of its directors or their adult children or spouses. SEC rules require the disclosure of material relationships between the company and directors, officers, significant shareholders, or members of their immediate families. In 2003, the NYSE and the Nasdaq adopted stricter definitions of independence for directors, required that a majority of the directors be independent, and mandated the role of independent directors in various areas, including the audit, compensation and nominating committees.

Earlier this year, the SEC and DOJ settled parallel criminal and civil enforcement actions against Titan Corporation ("Titan") under the Foreign Corrupt Practices Act ("FCPA"). Titan agreed to pay the largest FCPA penalty to date of $28.5 million. This case is a reminder that companies need to adopt and enforce FCPA compliance policies before the discovery of FCPA problems leads to the unraveling of potential merger discussions and creates financial and reputational risk for the company, both of which occurred in Titan's case. The SEC's investigation of Titan also highlights future potential enforcement actions under the antifraud and proxy provisions of the federal securities laws for publication of false or misleading material disclosures regarding provisions in merger and other agreements filed with the SEC by an "issuer." See Related Resources