In one of the largest penalties in Wall Street history, Goldman Sachs Group Inc. agreed to pay $550 million to settle civil charges that it duped clients by selling mortgage securities that were secretly designed by a hedge-fund firm to cash in on the housing market's collapse.

Kevin LaCroix, Partner in OakBridge Insurance Services and author of The D&O Diary has broken down the details of the settlement, including some items that have not recieved the widespread attention in the media.

Read his insights here on the D&O Diary Blog.

From Robert Schroeder at MarketWatch:

The Supreme Court struck down part of the 2002 Sarbanes-Oxley Act on Monday, saying that a section of the landmark law enacted after the corporate governance scandals of the early 2000s violates the Constitution's separation of powers mandate.

Chief Justice John Roberts, writing for the majority, said that the structure of the Public Company Accounting Oversight Board -- created by Sarbanes-Oxley -- violated the Constitution. It is too difficult for the president to remove board members, Roberts wrote. Read Supreme Court decision.

But excluding this change, the Sarbanes-Oxley Act "remains fully operative as a law," Roberts wrote, and the court rejected a challenge to the constitutionality of the entire law.

Read the full story here on the MarketWatch.Com website:

http://www.marketwatch.com/story/supreme-court-strikes-down-part-of-sarbanes-oxley-2010-06-28-125200?reflink=MW_news_stmp

Richard Bortnick, Angelo Savino and Stephanie Gantman from the Cozen O'Connor law fim have a note posted in Mondaq this morning detailing the settlement of  a derivative action captions In re Cox Radio, Inc. Shareholder's Litigation where the ruling may have a material impact on D&O insurers' coverage analysis with respect to such awards.

Check out the full article here on the Mondaq website.

A BP shareholder has filed suit against the corporation's top executives because of the offshore rig disaster that has led to the growing oil leak in the Gulf of Mexico.

Filed in federal court in New Orleans on Friday, the lawsuit by Pennsylvania resident Katherine Firpo accuses Anthony B. Hayward, the chief executive officer of BP PLC, and other executives of the London-based corporation, of ignoring safety issues on rigs such as the Deepwater Horizon, which exploded on April 20.

And she accuses them of pursuing cost-cutting measures at the expense of safety, while lobbying government authorities to decrease safety regulation. The lawsuit says the rig accident and the leak it caused will cost BP tens of billions of dollars.

The suit is a "shareholder derivative" suit, meaning it was filed by a shareholder on the company's behalf. Among other things, the lawsuit seeks court-ordered changes in BP's corporate governance, and an order that the executives pay monetary damages.

Read the full story from the Associated Press here on the Google News website.

Photo from NASA.

From Associated Press -

Federal authorities will charge at least two employees from disgraced financier Bernard Madoff's former firm in the coming weeks — and Madoff's brother and two sons could be next, two people familiar with the probe into Madoff's financial fraud told The Associated Press.

Madoff's brother, Peter, and sons Andrew and Mark — executives in the Madoff firm's legitimate market-making and proprietary-trading business — are likely to face tax fraud charges later this year, but may escape more serious securities fraud charges if authorities fail to come up with solid evidence they knowingly participated in the massive fraud, the people said.

The people, who asked not to be identified because the investigation hasn't been completed, declined to name the two employees or specify possible charges.

Read the full story here on the Yahoo! News website.

D&O Insurance and the Outcome and Timing of Securities Class Action Resolution: What New Data Shows

Free PLUS Webinar Presentation - Thursday, April 22 at 2:00 p.m. EDT, 11:00 a.m. PDT

In the February and March issues of PLUS Journal, a two-part article by Professor Michael Klausner and Jason Hegland of Stanford Law School analyzed new data compiled from their research on securities class-action settlements.  PLUS will be presenting a free webinar where panelists analyze the data presented in the article and discuss practical implications for D&O underwriters, brokers and claims personnel.

Topics:

• What proportion of settlements do insurers pay and what factors influence the insurer’s contribution?
• What is the effect of parallel SEC actions?
• When do directors and officers make out-of-pocket payments?
• How does the timing of the settlement affect the payouts?
• Why do larger companies tend to settle later than smaller companies?
• What surprises did the data reveal?
• What are the implications for you?

Presenters:

Michael Klausner is the Nancy & Charles Munger Professor of Business and Professor of Law at Stanford Law School and author of the study and article.

Kevin LaCroix is Partner with OakBridge Insurance Service, an intermediary focused on management liability issues, and author of The D&O Diary blog.

Steve Anderson is Executive Managing Director at Beecher Carlson, an insurance brokerage, where he leads their Executive Liability Practice.

Todd Greeley is a Vice President at CNA Financial Corporation where he manages the Pro Open Brokerage Claim unit of CNA's Specialty Lines.

Paul Lavelle is President of LVL Claims Services and will act as moderator for the webinar.

To join us for this free webinar, please register here: https://www1.gotomeeting.com/register/293991752

If you missed the 2010 PLUS D&O Symposium, you missed more than 1200 of your colleagues gathering to hear from industry experts and key decision makers about the current state of the D&O Market.  As the LG posts below point out, you also missed out on the networking and fun.

However, don't just take our word for it....check out some of the media write-ups on the program that have come out since it ended:

AM BEST features a story on D&O market dynamics with information from the View From The Top and Coverage Wish Lists panels.

Reactions Magazine features a story on Thursday Luncheon Keynote Kenneth Feinberg and Executive Pay Calculation.

Reactions Magazine features a story on D&O Insurers and the Claims Pipeline.

Make plans to attend next year's program so you are where the news is being created!

If you are unable to view the above graphic, please click here.

This Fox Business interview with Attorney Robert Profusek discusses what correlation, if any, exists between executive pay and banking risk.

According to the Wall Street Journal, the ongoing fracas between Kenneth Feinberg (the government's compensation czar and speaker at the 2010 PLUS D&O Symposium) and AIG has lead five high ranking executives threatening to quit if their compensation is cut significantly.

Read the quick blurb here on the StarTribune website.

The most powerful czar in Washington will receive some long-overdue scrutiny today when the Supreme Court hears a challenge to the constitutionality of the Public Company Accounting Oversight Board (PCAOB).

This board, created by the Sarbanes-Oxley Act of 2002, regulates the auditors of publicly-traded firms. The members are hired by the Securities and Exchange Commission (SEC) and, say the plaintiffs in Free Enterprise Fund v. PCAOB, do not answer to the president. This violates the Constitution's "appointments clause," according to which senior executive-branch officials should be appointed by the president and confirmed by the Senate.

Yet Sarbanes-Oxley, or Sarbox, itself should be subject to scrutiny. New research suggests that the costs of this legislation far outweigh its benefits to the investing public.

Read the full story here on the Wall Street Journal website.

The Supreme Court said Monday it would decide when U.S. laws against securities fraud apply to transnational securities dealings, specifically involving a case about a shareholder lawsuit against National Australia Bank Ltd and its former U.S. mortgage unit.

The justices agreed to review a ruling by a U.S. appeals court in New York that upheld the dismissal of the lawsuit after two large write-downs in 2001 related to the bank's unit, HomeSide Lending Inc.

The appeals court ruled U.S. courts did not have jurisdiction to decide the lawsuit because the key allegations at the heart of the fraud occurred outside the United States.

Read the full story here on the Insurance Journal Website.

National Underwriter has posted a series of articles based on some of the educational sessions from the 2009 PLUS International Conference.

Did D&O Fuel the Credit Crisis?  Find out here in this recap article of the session titled Executive Compensation, Corporate Governance, Global Warming: The Heat is On.

Also, there were two articles that came out of the session titled The Credit Crunch - What's Crime Got to Do With It?.  You can read them here:

Crime Policies, Bonds, Seen Slim Cover for Ponzi, Mortgage Scams

Madoff's Insurance Broker Gives New Details of His Coverage

For all of the presentations, please visit the following page of the PLUS Website (and click on the Material tab):

2009 PLUS International Conference

It took just five weeks after the WorldCom accounting scandal erupted in 2002 for Congress to pass, and President George W. Bush to sign, the Sarbanes-Oxley Act. That law required public companies to make sure their internal controls against fraud were not full of holes.

It took three more years for Bernard Ebbers, the man who built WorldCom into a giant, to be sentenced to 25 years in prison for his role in the fraud.

Mr. Ebbers will be 85 years old before he is eligible for release from prison. He may be freed, however, before the law is ever enforced on the vast majority of American companies. A Congressional committee voted this week to repeal a crucial part of the law. Other parts are also under attack.

Sarbanes-Oxley was passed, almost unanimously, by a Republican-controlled House and a Democratic-controlled Senate. Now a Democratic Congress is gutting it with the apparent approval of the Obama administration.

Read the full story here on the New York Times website.

Directors of mutual-fund boards are watching warily as an important case on fund fees comes before the U.S. Supreme Court.

They fear that Jones v. Harris Associates, which the Court is set to hear on Monday, could create a new standard for setting fees and possibly open the gates to a flood of litigation, or remove directors from the fee-negotiation process altogether. If the court in some way opens the door to more fee challenges, it could also become more difficult to hire directors.

None of that would be good for shareholders or directors, says Jamie Baxter, vice chair of Putnam Funds. "If all someone has to do is file a case, saying, 'these fees are too high,' then you have to defend it."

In August 2004, three investors in Oakmark Funds sued Harris Associates, the funds' creator and adviser, alleging it breached its fiduciary duties by charging excessive fees to individual investors compared with those charged institutional shareholders. A district court and an appeals court have sided with the funds.

"I've been on the other end of those cases, where shareholders have said Putnam's fees are too high," said Baxter. The shareholders haven't won, but preparing and going through depositions requires an enormous amount of time and effort and costs shareholders' money, she said.

The role of boards is central to the Jones v. Harris Associates case, as the plaintiffs have alleged there were conflicting relationships among the trustees and Harris personnel. Many expect that the Court will give boards guidance on negotiating fees.

Under the Investment Company Act of 1940, boards, including independent directors, are charged with the primary responsibility for protecting investors' interests. In 1970, boards' roles in evaluating and approving advisory fees were expanded. Those amendments also imposed a fiduciary duty on a fund's adviser regarding compensation for services from the fund, and gave fund shareholders the right to sue for a breach of that duty.

Read the full story here on the Wall Street Journal website.

The changes at these non-financial firms aren't a direct response to moves by Treasury pay czar Kenneth Feinberg and the Federal Reserve, which apply to banks and big recipients of government bailout funds. The recession, more than government regulation, is driving some of the moves.

But companies for a while have been seeking ways to reward executives' long-term performance and limit excessive risk-taking, according to compensation consultants.

"We are at the tipping point" for eliminating big annual bonuses, outsized severance agreements and other traditional pay practices, said James F. Reda, managing director of his pay consultancy in New York.

Among the changes: more stock-based compensation, with longer waiting periods before it can be sold; higher performance hurdles for bonuses; and limits on perks, severance and supplemental pensions.

Read the full story here on the Wall Street Journal website.