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Option backdating settlement

First, plaintiffs moved to compel defendants to produce documents compiled and drafted by the company’s outside counsel during the course of its independent investigation – documents the court had previously determined were protected by the work product doctrine. Next, plaintiffs moved the court to unseal the record and publicly expose the company’s fraudulent options practices.At the hearing on the motion, Magistrate Judge Franklin L. The court ordered that certain previously redacted facts and evidence revealing the true scope of defendants’ fraud be made available to the public.

As a director, Krug says, “Your obligation is to not be negligent, but under most states’ corporate law, you will not be held liable unless you acted grossly negligently—so negligently.”“That’s a really low standard—and most directors, even [those] that are negligent, pass it.”Carson received a nominal $45,500 annually for his mental and physical exertions as one of Costco’s board members, according to financial disclosures recently filed with the FEC, in addition to another $50,000-$100,000 in annual dividends as a shareholder. “It means actually reading the thing.”“Typically—and I don’t know what Carson was given, in terms of information—but typically directors are given a lot of information before a board meeting,” she says.“I mean, each board typically has a counsel devoted toward advising the board on legal issues.

It was a real job, in other words, with real pay and real obligations. The counsel certainly doesn’t want to be charged with any sort of malpractice later on.

Politics aside, few would argue that GOP presidential hopeful Ben Carson—a retired pediatric neurosurgeon—isn’t a bright guy.

So what does it mean that, while serving on Costco’s board from 2002 to 2005, Ben Carson was accused of granting over 1.01 million shares worth of illegally backdated stock options?

Plaintiffs’ success on these fronts was resounding.

Although accounting issues concerning stock options grants are complex, the documents and testimony plaintiffs acquired during discovery established a strong case regarding liability.

According to the complaint, the concealment of the backdating scheme led to the misrepresentation of Costco’s actual net income, its shareholders’ equity, and the full tax obligations involved—and all this had the ancillary benefit of artificially inflating Costco’s stock price.

In April 2006, Carson sold roughly 12,000 shares of the company at this elevated price, netting 5,460 in what was alleged in the operative complaint to be, effectively, insider trading (just one of the many charges leveled against him by the plaintiffs). Attorney’s Office to decline prosecution was that Sinegal and Costco’s CFO, Richard Galanti, generously slapped themselves on the wrist, forgoing some fresh stock options and about

Although accounting issues concerning stock options grants are complex, the documents and testimony plaintiffs acquired during discovery established a strong case regarding liability.

According to the complaint, the concealment of the backdating scheme led to the misrepresentation of Costco’s actual net income, its shareholders’ equity, and the full tax obligations involved—and all this had the ancillary benefit of artificially inflating Costco’s stock price.

In April 2006, Carson sold roughly 12,000 shares of the company at this elevated price, netting $655,460 in what was alleged in the operative complaint to be, effectively, insider trading (just one of the many charges leveled against him by the plaintiffs). Attorney’s Office to decline prosecution was that Sinegal and Costco’s CFO, Richard Galanti, generously slapped themselves on the wrist, forgoing some fresh stock options and about $1.2 million in bonuses between them.

Regardless, plaintiffs faced significant legal hurdles to show loss causation – that the actions of defendants were responsible for causing the stock losses – as well as damages. [y]ou are certainly free to try to change my mind.” A combination of novel legal argument, defendants’ own documents, and testimony did just that.

Determined to find the pressure points that could lead to settlement, plaintiffs pursued two separate discovery matters, which ultimately forced the company’s hand. On June 4, 2008, Magistrate Judge Noel ordered that defendants produce the previously withheld documents to plaintiffs.

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Although accounting issues concerning stock options grants are complex, the documents and testimony plaintiffs acquired during discovery established a strong case regarding liability.According to the complaint, the concealment of the backdating scheme led to the misrepresentation of Costco’s actual net income, its shareholders’ equity, and the full tax obligations involved—and all this had the ancillary benefit of artificially inflating Costco’s stock price.In April 2006, Carson sold roughly 12,000 shares of the company at this elevated price, netting $655,460 in what was alleged in the operative complaint to be, effectively, insider trading (just one of the many charges leveled against him by the plaintiffs). Attorney’s Office to decline prosecution was that Sinegal and Costco’s CFO, Richard Galanti, generously slapped themselves on the wrist, forgoing some fresh stock options and about $1.2 million in bonuses between them.Regardless, plaintiffs faced significant legal hurdles to show loss causation – that the actions of defendants were responsible for causing the stock losses – as well as damages. [y]ou are certainly free to try to change my mind.” A combination of novel legal argument, defendants’ own documents, and testimony did just that.Determined to find the pressure points that could lead to settlement, plaintiffs pursued two separate discovery matters, which ultimately forced the company’s hand. On June 4, 2008, Magistrate Judge Noel ordered that defendants produce the previously withheld documents to plaintiffs.On July 1, 2008, California Public Employees’ Retirement System (“Cal PERS”) and Alaska Plumbing and Pipefitting Industry Pension Trust (“Alaska”) announced a settlement with United Health Group Inc.and certain individual defendants for a record-breaking $895 million.Based on this voluminous paper trail, the complaint accuses Carson of a litany of wrongdoing, beyond insider trading, that included unjust enrichment, corporate waste, constructive fraud, gross mismanagement, violations of the Exchange Act, breach of his fiduciary duty, and others.Given how quickly the Costco case shifted into mediation and settlement mode, it is still an open question whether Ben Carson was merely signing off on anything and everything like an irresponsible idiot, if he was somehow tricked, or if he was knowingly engaged in the fraud—or for that matter which of these versions of Ben Carson voters will find more presidential.You don’t have to be a brain surgeon to figure out that Ben Carson bears some culpability here, in one of the few large managerial roles he has held that’s even remotely comparable to holding national office.“Signing-off, in the board context, is something more than simply saying, ‘Oh, it’s a document. Maybe it’s not the counsel that’s responsible for providing the information, but whomever is wants to make sure the board has sufficient information to make all appropriate decisions in a well-informed manner.”Presidents of the United States, you may recall, are similarly required to manage complex bureaucratic institutions, and to sign off on written materials that they are expected to have read, comprehended, and actually endorsed.An accounting of the documents that Carson either had a hand in preparing or ostensibly ratified with his signature ought to provide some perspective on the severity of his involvement.

.2 million in bonuses between them.

Regardless, plaintiffs faced significant legal hurdles to show loss causation – that the actions of defendants were responsible for causing the stock losses – as well as damages. [y]ou are certainly free to try to change my mind.” A combination of novel legal argument, defendants’ own documents, and testimony did just that.

Determined to find the pressure points that could lead to settlement, plaintiffs pursued two separate discovery matters, which ultimately forced the company’s hand. On June 4, 2008, Magistrate Judge Noel ordered that defendants produce the previously withheld documents to plaintiffs.

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