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Sent: Friday, October 12, 2007 11:06 AM
Subject: Questions raised by reports of undisclosed payments and
failure to protect CA corporate rights
Responding to some of your comments, the
recent reports of new
accusations and a court
order barring company claims have raised what must be considered new
questions about the board's performance of its responsibilities for the
conduct of investigations and control of litigation.
It is certainly reasonable for an investor to
ask whether board members knew about the unreported, indirect payments to
director D'Amato, and, if not, why they had not at least done the kind of
research performed by a
Newsday reporter. The following articles from 2002 about similar
discoveries show (a) that the board, as well as its Special Litigation
Committee and the court-appointed Examiner, should have been alert to the
need for careful inquiry, and (b) that the board, and especially director
D'Amato himself, should have been sensitive to the need to report the
information to investors:
Regarding the court's determination
that the company had failed to protect its rights, we must separate
the issues concerning the professional responsibilities of lawyers from
those concerning the fiduciary responsibilities of directors. Legal
issues will have to be decided by lawyers and the courts, not by
investors. What investors have to decide is whether the company's board
members are satisfactorily performing their duties to assure that the
company is being competently advised and represented by legal
professionals, and are then taking whatever actions are in the best
interest of CA and its shareholders. This is how the CA board's own
Special Litigation Committee summarized the professional and board
responsibilities in its April 2007 report after
a seemingly thorough investigation:
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“…especially in situations as
critical as the one that CA confronted, the professionals have a
responsibility to take all necessary steps to make sure that the
Board – and not just Company management – understands precisely
what the professionals are, and are not, doing. But in the end, at
all times, the onus is on the Board to actively and appropriately
manage and supervise its professionals, and without having these
understandings, a Board will not have the wherewithal to do so.” |
The Forum's purpose, of course, is to serve the interests of investors in
providing the information needed for their decisions, relating to buying
and selling stock as well as to voting for directors. Your advice of what
is important to you will be welcomed to guide us.
- GL
Gary Lutin
Lutin & Company
575 Madison Avenue, 10th Floor
New York, New York 10022
Tel: 212/605-0335
Email: gl@shareholderforum.com
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