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DC Circuit dismisses Fannie Mae shareholder suit
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2008/08/11 07:11
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The US Court of Appeals for the DC Circuit on Friday dismissed a shareholder suit against government-sponsored lender Fannie Mae for alleged wrongdoing by the board of directors. Shareholders accused the board of failing to take appropriate steps in 2004 to prevent accounting violations, and also asserted that the board should not have approved $31 million in severance benefits for two officers who resigned as a result of the violations. Upholding the district court's decision, the DC Circuit held that it had the authority to hear claims against Fannie Mae, but that the appellants were not excused from making demand on the board prior to filing suit. Judge Kavanaugh commented, The story of Fannie Mae told by these reports is disturbing. Later in the opinion, he wrote:
blockquote According to plaintiffs, the complaint alleges that the directors crossed that line by failing to adequately respond to several “red flags”: (1) a $200 million audit difference originating in 1998; (2) a whistleblower’s complaints that Fannie Mae was improperly manipulating earnings; (3) signs that Fannie Mae management was using improper hedge accounting practices; and (4) sister company Freddie Mac’s disclosure in 2003 that it had understated profits. We disagree that these allegations create a“substantial likelihood” of personal liability for the directors. On each claim, the Board or its relevant committee looked into the matter and relied on internal or external accounting experts and officials responsible for those matters./blockquoteAlso Friday, Fannie Mae announced a second quarter loss in excess of $2 billion, prompting careful evaluation of recent legislative action and leading to increased speculation about a government bailout.
In October 2004, the US Department of Justice began an investigation into whether Fannie Mae broke accounting rules to boost earnings and executive bonuses, but dropped the investigation in August 2006. In May 2005, Fannie Mae agreed to pay $400 million as part of a settlement with regulators at the Securities and Exchange Commission. In April of this year, former CEO Franklin Raines agreed to pay $24.7 million to settle a related civil lawsuit brought by the Office of Federal Housing Enterprise Oversight. |
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Texas executes second foreign national since ICJ order
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2008/08/08 07:15
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Convicted murderer Heliberto Chi on Thursday became the second foreign national to be put to death in Texas since the International Court of Justice ordered the US to stay such executions. The US Supreme Court refused to grant either a stay or certiorari just hours before the Honduran man was executed at 6 pm local time. Lawyers for the Honduran government have argued that Chi was improperly prevented from contacting his government in violation of the 1963 Vienna Convention on Consular Relations. Last month, lawyers for Mexico made a similar argument before the ICJ to block the execution of Mexican citizen Jose Ernesto Medellin, which took place on Tuesday.
The governor of Texas announced his refusal to comply with the ICJ order last month. In March, the US Supreme Court ruled in Medellin v. Texas that neither a 2005 memorandum from President Bush ordering Texas to rehear several cases against Mexican nationals nor the March 2004 ICJ decision were binding on Texas officials who had refused to rehear Medellin's case. Last year, the Texas Court of Criminal Appeals stayed Chi's lethal injection execution while the US Supreme Court considered Baze v. Rees, a case reviewing whether lethal injection is unconstitutional under the Eighth Amendment. |
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Female Football Player Claims Discrimination
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2008/08/06 09:07
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A female high-school football player claims she was discriminated against and suffered a severe injury, because her coach wanted to show that girls were not tough enough to play football.
The Evansville Community School District and head coach Ron Grovesteen discriminated against Ivyanne Elborough by refusing to give her a permanent jersey, denying her access to a women's locker room to change and forcing her to cut her hair, Elborough and her mother claim in Federal Court.
Elborough had joined the Evansville High School football team as a freshman. She claims the coach posted the practice schedule only in the boys' locker room, where she could not see it. Similarly, she says snacks were served there, preventing Elborough from enjoying them with the rest of the team.
This had the effect of locating certain aspects of team camaraderie in a place that was inaccessible to Plaintiff Elborough, the lawsuit claims.
Grovesteen, allegedly made Elborough cut her hair very short twice, even though boys on the team were permitted to have longer hair styles. She claims Grovesteen told her that cutting her hair like a boy's was a commitment she needed to be willing to make to play football.
She says Grovesteen refused to unlock the women's locker room so that Elborough could get her safety gear and allowed the plaintiff to practice without it. As a result, Elborough was seriously injured during practice. He was malicious and willful in failing to prevent injury to Plaintiff Elborough ... because he wanted to deter (her) and future female students from participating on the football team.
Elborough and her mom seek compensation for alleged injuries, medical costs, humiliation, mental and emotional distress, and other damages. They are represented by Jett Scott Olson. |
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Anheuser-Bush Invokes Cuban Embargo To Fight Buyout
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2008/07/09 07:18
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Anheuser-Busch has fired back at InBev, claiming the Belgium-based beer company made false statements about its buyout plan to try to buy the American beer giant at a discount. Among other things, Anheuser-Busch claims that InBev's 570 workers in Cuba, where InBev owns 55 percent of the beer market, would run afoul of the U.S. trade embargo.
In its federal claim, Anheuser-Busch challenges InBev's declaration that it would base its North American headquarters in St. Louis. InBev's Cuban operations would prevent that because of the Trading with the Enemy Act and Cuban Assets Control Regulations, the complaint states.
The lawsuit also questions InBev's statement that it has fully committed financing to buy Anheuser-Busch.
Given the current state of the credit markets, no group of lenders would unconditionally agree to loan InBev the $40 billion it will need, the complaint states. Any commitments InBev has received are certainly rife with conditions leaving the proposed lenders free to walk away if, for example, market conditions deteriorate, InBev's or the Company's performance worsens, or they are unable to syndicate their loans. For InBev to tout its purportedly 'fully committed' financing without disclosing these conditions is materially misleading.
Anheuser-Busch seeks an injunction prohibiting InBev from soliciting shareholders until it has clarified the allegedly misleading statements. InBev sued in Delaware state court in June, seeking to oust Anheuser-Busch's Board of Directors after the board rejected InBev's $47 billion offer.
Anheuser-Busch is represented by James Bennett. |
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