Declining Securities Lawsuit Frequency: A Cynical Explanation?

When the Cornerstone Research and the Stanford Law School Securities Class Action Clearinghouse released their “2006 Mid-Year Assessment” earlier this week, the Report showed a 45% decline in the number of securities lawsuits filed in the first half of 2006 compared to the prior year period. According to the Report, the 61 securities class action lawsuits filed in the first half of 2006 represents the lowest level of securities lawsuit activity since 1996. The Report suggested a number of possible reasons for the decline, including the dissipation of the ill effects from the boom and bust period of the late 90s; the cleansing effects of Sarbanes Oxley; and the absence of stock market volatility. A prior D & O Diary post discussing the Report may be found here.

The D & O Diary finds the Report’s explanations for the litigation decline plausible, but insufficient. There is another possible explanation that, while cynical, may come closer to the truth.

Another hot topic in the securities law arena shows that sometimes only a cynical view can get at the truth. For years, academics had had been aware of a statistical pattern showing that share prices often rose quickly after options were granted. The early researchers speculated that corporate executives who knew that good news was on the horizon and made sure that options were granted beforehand. According to the May 30, 2006 Wall Street Journal(subscription required) article describing his research, when Erik Lie (now a Professor at the University of Iowa Business School) examined options grants as part of his doctoral research, he “found a striking pattern in which prices fell before the grant date, and rose soon afterward. He also discovered that the stock market as a whole also often rose following option grants at certain companies.” Dr. Lie found it “uncanny” how good the executives apparently were at predicting future stock prices. He became suspicious, and when he released his research, he suggested that at least some of the awards had been timed retroactively. Other academics thought his explanation to “sinister” and rejected it. It was not until his research appeared in a front page Wall Street Journal article that his cynical explanation for a widely observed phenomenon was accepted. Professor Lie was just cynical enough to be able to explain a widely observed but inexplicable set of facts.

Perhaps a similarly cynical view may also explain the decline in securities lawsuit filings.

An alert D & O Diary reader commented that the decline actually began in September 2005. It was this observation that raised the possibility to me that the answer to the frequency decline may lie in the Milberg Weiss indictment. Paragraphs 26 and 27 of the First Superseding Indictment (which may be found here) provide as follows:

26. During the time relevant to this Indictment, MILBERG WEISS brought numerous class actions and shareholder derivative actions against publicly traded companies and other major businesses. These lawsuits generated hundreds of millions of dollars in attorneys’ fees for MILBERG WEISS. To bring these lawsuits, MILBERG WEISS needed persons who would agree to serve as named plaintiffs, and whom the courts would likely approve to represent absent class members or shareholders.

27. Beginning at least as early as in or about 1981 and continuing through at least 2005, in order to facilitate the recruitment of named plaintiffs, MILBERG WEISS, BERSHAD,SCHULMAN, and others known and unknown to the Grand Jury agreed to and did secretly pay kickbacks to named plaintiffs in class actions and shareholder derivative actions in which MILBERG WEISS served as counsel. Specifically, MILBERG WEISS, BERSHAD, SCHULMAN, and others known and unknown to the Grand Jury agreed to and did pay to certain individuals a substantial portion of the attorneys’ fees MILBERG WEISS obtained in actions in which such an individual served, or caused a relative or associate to serve, as a named plaintiff for MILBERG WEISS.

These of course are mere allegations and the defendants are entitled to a presumption of innocence. But if we assume for the sake of argument that these allegations are true, several things are clear: Milberg Weiss “needed” the paid plaintiffs because without them they could not have made hundreds of millions of dollars in fees. Milberg Weiss certainly would not have paid people to serve as plaintiffs if there were people willing to do it for free. Lacking volunteers, the firm employed mercenaries. The paid plaintiffs were an indispensable component in the firm's ability to produce inventory -- leading one to wonder whether production would have ceased or at least declined if the component supply were cut off?

Milberg Weiss now stands accused of paying kickbacks. Milberg Weiss may have drawn the prosecutors' attention because of its prominence, and perhaps even because of the scale of its reliance on paid plaintiffs, but if it happened, is it possible that they were the only firm relying on paid plaintiffs? Or is it more likely that in the highly lucrative but highly competitive world of the plaintiffs’ securities bar that these practices were widespread?

The indictment alleges that the practice of paying plaintiffs continued “through at least 2005,” right about the time it started to look as if the prosecutors were serious about pursuing Milberg Weiss criminally. The grand jury investigation was well publicized, so it became pretty clear that paying plaintiffs could lead to trouble, and, it may be presumed, the practice stopped. Right about the time that the securities lawsuit frequency started to decline.

Is it possible that securities lawsuit frequency is declining because the threat of criminal prosecution has disrupted supply of a key component in the plaintiffs' lawyers' most important product – that is, without the ability to pay people to serve as named plaintiffs, the plaintiffs' lawyers can’t find anyone else to do it so they are producing fewer lawsuits? Is it possible that the lawsuits that depended on paid plaintiffs just aren't getting filed?

The D & O Diary is interested in your comments.

D & O Insurers' Exposure to Backdating Lawsuits: According to John Degnan, the Chief Administrative Officer of Chubb, "[t]he early hype about the impact of backdated stock options on D & O insurers may be overblown." According to news reports, Degnan cites several reasons why Chubb's exposure may be limited:

In most cases, Chubb is only an excess carrier, so it's not immediately exposed to costs related to directors' and other executives' legal costs as they defend backdating allegations, he explained. (Excess of loss insurance only kicks in when losses breach certain thresholds).

Chubb has also limited the maximum payouts on the D&O policies it writes. Limits are now "far lower" than they were when the corporate scandals of earlier this decade struck, Degnan added.

Chubb usually only insures one chunk of potential losses on each D&O policy it underwrites. That should help it avoid lots of different losses piling up, Degnan said.

Share price drops in the backdating scandal have been limited so far, which should keep securities class action lawsuits to a minimum, he also noted.

Most of the claims Chubb has received so far come from derivative lawsuits, which are harder for plaintiffs to win and usually result in smaller settlements, Degnan said

Nineteen companies have notified St. Paul Travelers of stock option-related claims or potential claims under their policies covering directors or officers, according to Chief Operating Officer Brian MacLean. Of those, St. Paul Travelers is the primary insurer at only one company, and there is a $10 million limit on that policy, he said."We believe that based on the facts today this is not going to be a big issue for us," he said. McLean's comments may be found here.

Reports About Earnings Guidance, Securities Litigation Frequency, and The D & O Insurance Marketplace

Eliminate Quarterly Guidance? On July 24, 2006, the CFA Centre for Financial Market Integrity and the Business Roundtable Institute for Corporate Ethics issued a Report entitled "Breaking the Short-Term Cycle: Discussion and Recommendations on How Corporate Leaders, Asset Managers, Investers and Analysts Can Refocus on Long-Term Value," calling on corporate leaders, asset managers and others to break the “short-term” obsession and reform practices involving earning guidance, compensation and communication to investors.

The report is the product of a series of symposia the groups co-sponsored to address issues of “short-termism.” The symposia participants included a number of widely respected individuals, including John Bogle of the Vanguard Group, Louis Thompson of the National Investor Relations Institute, and other representatives from companies, investor groups and securities analyst firms.

The report states that “the obsession with short term results by investors, asset management firms, and corporate managers collectively leads to the un-intended consequences of destroying long-term value.”

The report’s recommendations include the following actions:

• End the practice of providing quarterly earnings guidance;
• Align corporate executive compensation with long-term goals and strategies and with long-term shareholder interests;
• Improve disclosure of asset managers’ incentive metrics, fee structures, and personal ownership of funds they manage; and
• Endorse the use of corporate long-term investment statements to shareowners that will clearly explain – beyond the requirements that are now an accepted practice – the company’s operating model.

With respect to quarterly earning guidance, the report notes the following:

Although there may be certain benefits to providing earnings guidance, the costs and negative consequences of the current focused, quarterly earnings guidance practices are significant, including (1) unproductive and wasted efforts by corporations in preparing such guidance, (2) neglect of long-term business growth in order to meet short-term expectations, (3) a “quarterly results” financial culture characterized by disproportionate reactions among internal and external groups to the downside and upside of earnings surprises, and (4) macro-incentives for companies to avoid earnings guidance pressure altogether by moving to the private markets.

A prior D & O Diary post noted that these and other concerns increasingly are motivating companies to move toward annual earning guidance only or the elimination of earnings guidance altogether. The elimination of quarterly earning guidance would not only address the concerns noted in the recent Report, but also would discourage activity that frequently is at the center of shareholders' claims against companies and their boards. The drive to make (or avoid missing) guidance is the root cause of many of the behaviors that drive shareholders' claims. The D & O Diary believes that implementation of the Report's recommendations for companies -- especially the Report's recommendation about eliminating quarterly earnings guidance -- would be an important step for any company that is serious about managing its securities litigation risk.

The groups' press release describing the Report can be found here. A summary of the Report’s recommendations can be found here. A July 25, 2006 cfo.com post discussing the report can be found here. An AAO Weblog post on the report can be found here.

Stanford Clearinghouse Mid-Year Report: On July 26, 2006, the Stanford Class Action Clearinghouse, in conjunction with Cornerstone Research, released their 2006 Mid-Year Class Action Securities Fraud Class-Action Filings Report, which can be found here. The report notes that the 61 class actions filed in the first half of 2006 represents a 45 percent decrease compared to the 111 filings observed in the first half of 2005. The 2006 mid-year numbers represent the lowest level of filing activity during a six-month period since 1996, just after the adoption of the PSLRA. The Report speculates that the decline is due to the passage of time from the Internet bubble of the late 1990s; to possible improvements to corporate governance owing to Sarbanes Oxley; and the overall absence of volatility in stock prices during recent periods. The press release that accompanies the report includes a quotation from a Cornerstone official that "[a]lthough there is no doubt that there has been a considerably lower level of filing activity over the last year, it is still too early to tell whether this is a permanent shift."

The D & O Diary agrees that it is way too early to conclude that the YTD numbers represent a fundamental change. Among other things that the D & O Diary thinks could still produce an uptick in class action securites activity this year is the options backdating scandal and the slow dissolution of the Milberg Weiss firm. Although the options backdating scandal has only produced limited class action securities litigation so far (as the Cornerstone mid-year Report duly notes), the string on the scandal still has a long way to run. The gradual out-migration of Milberg lawyers, including the spawn of new law firms, as well as the attraction of existing plaintiffs' firms (including firms traditionally associated with tobacco or asbetos litigation) to Milberg's space, create a population of plaintiffs' firms and attorneys that need to justify their existence. In addition, market causes, such as the low share price volatility, can change. Rising interest rates and energy prices, war in the Middle East, and the threat of terrorism and natural catastrophes all present the potential to generate volatility and undermine the generally stable business environment we have enjoyed for several good years.

The D & O Diary also notes that the class action securities lawsuits may not even be the shareholders litigation story for the first half of 2006. The real story may be the raft of shareholders' derivative suits that the options backdating scandal has generated (up to 49 cases at last count.)

State of the D & O Marketplace: On July 17, 2006, Advisen released its “Commercial Lines Expert Witness Report for D & O” which surveys the current state of play in the D & O insurance marketplace. The report contains the comments from 14 “thought leaders” in the D & O arena (including underwriters, reinsurers, brokers and attorneys). The commentators share their views on trends in D & O pricing and terms and conditions; the impact of the options backdating scandal and of Sarbanes Oxley on the D & O marketplace; and legal developments that the experts are following. The Advisen Report is a little repetitive, but there are a few nuggets that reward close reading, particularly with respect to policy terms and to legal trends. The comments of several underwriters that D & O pricing will (or at least should) rise in the second half of 2006 appear problematic in light of the statistics in the Cornerstone Report. The Advisen Report can be found here.

Some Healthy Options Backdating Skepticism: As observers and commentators have tried to get a handle on how widespread the options backdating scandal is, some pretty large numbers have gotten thrown around. For example, Professor Erik Lie and Randall Heron’s latest study concludes that over 2,200 companies backdated options. Comes now Broc Romanek of the CorporateCounsel.net blog who solemnly declares in this July 24, 2006 post that “[m]y gut tells me there is something fishy” about these numbers. The basis for Romanek’s skepticism is a fundamental disbelief that that many people are lying, coupled with a informed belief that many companies have already verified that their companies do not have a problem. Whether or not Romanek’s gut is more reliable than Professors Lie's and Heron’s analysis is for others to decide, but Romanek does have a point. The sheer magnitude of the Professors' numbers do create credibility tension. If the whole Y2K fiasco taught us nothing else, it surely taught us to be suspicious when the experts are announcing the arrival of Armageddon.

Head Case Redux: As a service to those for whom the Zidane head-butt controversy was the biggest story so far this year, The D & O Diary includes this link to a July 25, 2006 USA Today article (with video footage) entitled “Jockey apologizes for head-butting horse.” (I am not making this up.) The jockey is sorry and assures everyone that this "will never happen again." I am sure the horse feels a lot better better about it now with that reassurance. The D & O Diary notes that, unlike Zidane, the jockey was wearing a helmet at the time of the head-butt. Is The D & O Diary the only one puzzled why anyone would ever use their head (which has numerous other important uses) as a weapon?

News About (and From) Plaintiffs' Lawyers

According to Gerald Silk of the Bernstein, Litowitz, Berger & Grossman firm, options backdating is a “make-or-break issue.” Silk is not talking about the interests of aggrieved shareholders --he means that options backdating is a really big deal for the plaintiffs’ bar. His comments appear in a July 24, 2006 article entitled “Plaintiffs’ Lawyers Jockey for Position,” in which law.com explores the struggle amongst plaintiffs’ lawyers for control of the growing wave of options backdating litigation. Among other things, the article examines the struggle between lawyers representing institutional and individual investors. The article also show why plaintiffs’ lawyers are preferring shareholders’ derivative lawsuit to securities fraud class actions in attempting to capitalize on the options backdating scandal; the article attributes the following to Silk:

derivative actions are more common in these backdating cases because, in order to have a securities class action under Rule 10-b(5), the stock has to fall and an investor has to demonstrate harm. This has not always been the case when it comes to the backdating scandal.

The article also shows that while derivative actions may represent a more limited opportunity for plaintiffs’ lawyers (from a fee standpoint), derivative actions have certain procedural advantages, such as the absence of a statutory preference for institutional shareholders and the absence of a statutory waiting period or discovery stay, all of which apply or may pertain in a federal securities action. As a result, plaintiffs’ lawyers representing individuals in derivative lawsuits are “rushing to court.”

The article's comments about the absence of significant share price declines for many of the companies involved in the options backdating investigation is consistent with The D & O Diary’s view that the options backdating scandal may not prove to be a “severity event” for the D & O insurance industry. On the other hand, it clearly is already a significant frequency event, and the frequency will continue to rise as the investigations continue to expand. For up-to-date frequency data for the options backdating litigation, visit this post of The D & O Diary, “Counting the Options Backdating Lawsuits.”

Hat tip to Adam Savett of the Lies, Damned Lies blog for a link to the law.com article.

Following our Right Honorable Friend, Bill Lerach: “These days Bill Lerach is either at the top of his profession — or on his way to jail.” That is the lead in the July 23, 2006 Los Angeles Times article reporting on what life is like these days for Lerach, in the wake of the Milberg Weiss law firm indictment. The Los Angeles Times article reflects various pundits' speculation that Lerach’s firm or Lerach himself may yet be dragged into the criminal proceedings. In what I suppose is intended to pass as news, the article concludes that “legal observers are divided about whether prosecutors are still gunning for Lerach.” While much of the article replays Lerach’s background with Milberg Weiss and his recent success in the Enron case, one comment reported in the article is particularly colorful; the article reports the following commentary from Walter Olson, a senior fellow at the Manhattan Institute for Policy Research:

Lerach is "far from the only lawyer who has concluded that being noisy and unpleasant is good tactics for getting what you want," Olson said. He stands out because "he's personalized it in a way that others haven't done, turning litigation into a contest of peacocks in the barnyard."

Nugget Author Moves On: Chris Jones, heretofore a partner in the Boca Raton office of the Milberg Weiss firm and also the author of the PSLRA Nugget, announced today in a post on his blog that he is leaving the Milberg Weiss firm to join two other prior Milberg Weiss departees at the new law firm of Saxena and White. According to a post on the WSJ.com law blog, the Milberg firm will now be closing the Boca Raton office and is now down to two offices from four.

Today's PSLRA Nugget post says that future posts will “decrease a little in frequency” as Jones adjusts to his new firm. The D & O Diary hopes the PSLRA Nugget is soon back up to speed. The D & O Diary is a subscriber to and regular reader of the Nugget and looks forward to continuing to read the Nugget’s interesting and entertaining posts.

A WSJ.com law blog post with futher discussion of the implications for the Milberg Weiss firm can be found here.

Outside Director Liability: The liability of outside directors was a hot topic earlier last year when the Enron and WorldCom settlements were first announced. As a result of the options backdating scandal, outside director liability is a hot topic again. Any public company director has to be concerned with the news that three outside directors at Mercury Interactive have been served with “Wells Notices” in connection with the options backdating investigation at Mercury. (Mercury's press release disclosing the Wells Notices can be found here.) In an earlier development, outside directors of Hollinger were served with Wells Notices in connection with the SEC’s investigation of Conrad Black. Outside director liability is clearly going to remain a hot topic. The author of The D & O Diary’s views about the risks and practical D & O insurance implications surrounding the issue of outside director liability can be found in this July 24, 2006 article entitled "Outside Director Liability: Increased Risks and Practical Considerations."

Proportionate Liability: The 10b-5Daily blog has an interesting July 24, 2006 post discussing a July 5, 2006 holding in the Enron Derivative and ERISA litigation in which the PSLRA's proportionate liability language is examined. The court, concerned about the "havoc" that the bare statutory language could create at trial, establishes threshold requirements for proportionate liability. Becase so few securities cases go to trial, this issue has not previously been examined by a court.

White Collar Crime Trends and the Options Backdating Investigations

With all of the media attention focused on the first options backdating criminal complaint, filed July 20, 2006 against two former officials of Brocade Communications Systems, and with published reports suggesting (for example in the July 21, 2006 front page article of the Wall Street Journal , subscription required) that prosecutors are investigating “over 80 companies” for options timing manipulations, it would be easy to conclude that the tide of federal white collar criminal prosecutions is mounting. And indeed with the options backdating story just beginning, it may well be that we are at the leading edge of a growing prosecutorial crackdown on corporate fraud.

But a July 18, 2006 Legal Times article entitled “Has the Wave of White-Collar Prosecutions Crested?” raises the question whether the crackdown on corporate criminals is in fact on the decline as a result of changing prosecutorial priorities. Citing the United States’ Attorneys’ Annual Statstical Report for Fiscal 2005, which can be found here, the article notes that “there was a 30 percent drop in the number of defendants charged with corporate fraud in 2005 over the previous year and a more than 50 percent decline in the number of corporate fraud investigations opened by federal prosecutors last year.” The 2005 figures were the lowest for any year since the 2002 post-Enron crackdown on corporate crime. The Legal Times article quotes a number of sources for the proposition that the decline in new prosecutions is due to a continued shift in resources toward terrorism investigation and public corruption. However, factors such as the options backdating scandal may yet relieve what could prove to be an otherwise temporary stall.

A Closer Look at the First Options Backdating Criminal Case: Wayne State University Law School Professor Peter Henning in a thoughtful July 21, 2006 post on his White Collar Crime Prof blog raises some interesting questions about the criminal complaint filed against the former Brocade Communications officials. First, he questions why the prosecutors chose to “proceed by criminal complaint rather than seeking a grand jury indictment,” and speculates that there may be plea agreements or statute of limitations concerns that motivated prosecutors to use a criminal complaint, but that there could be “an indictment in the next few weeks that may well contain more charges, perhaps including books-and-records accounting." Professor Henning also raises questions about the merits of the criminal complaint:

While the charges allege numerous instances of options grants involving backdated documents, it remains unclear what constitutes the securities fraud....[I]t is not clear what constituted the fraudulent scheme when the employees received the proper amount of options while their additional paper gains were not “taken” from the company. To the extent that fraud is a type of larceny, it is not easy to see the company as a victim of the deception, and [defendant] Reyes did not gain from the transactions, at least not directly. Not all lies are frauds, and the government’s case may be a difficult one, at least on a securities fraud charge.

The D & O Diary notes that while the SEC filed a parallel civil complaint against three former Brocade Communications executives, thus far other Brocade officials, including Brocade’s outside directors, have not been named. The non-involvement of Brocade's outside directors stands by interesting contrast to the Mercury Interactive investigation, where three former outside directors of Mercury have been served with “Wells” notices. As has been noted on prior this D &O Diary post, Brocade's former outside directors include Larry Sonsini, of the Wilson Sonsini Goodrich & Rosati law firm and one of the most prominent lawyers in Silicon Valley. The WSJ.com law blog has an interesting post discussing the fact that Wilson Sonsini has represented over half of the more than 30 Silicon Valley companies that have been named in connection with the options backdating investigation. A July 22, 2006 New York Times article discussing the significance of options backdating in Silicon Valley during the dot-com boom and afterwards, and the role of the Wilson Sonsini firm, can be found here. A cool feature of the Times article is an interactive map showing the geographic location of Silicon Valley firms involved in the options backdating investigation.

Finally, The D & O Diary notes that the Brocade Communications options timing scandal presents an example of hiring-related options timing, which as discussed on this prior D & O Diary post, involves important differences from options backdating and options springloading. The most important difference that is that hiring-related options timing may not involve self-dealing or personal enrichment. According to this WSJ.com law blog post, the absence of self-dealing or personal benefit is precisely the basis on which the defense attorney for Gregory Reyes, Brocade’s former CEO, is raising in Mr. Reyes’ criminal defense.

More Statistical Analysis of Options Backdating: Graef Crystal has an interesting July 20, 2006 article on Bloomberg.com analyzing opportunistic option timing. Crystal looked 16,211 options grants made to chief executive officers between 1992 and 2005. He analyzed the actual and expected option exercise prices compared to the share prices in the 180-days before and after the date of the awards. The expectation would be that the exercise price would fall at the mid point of the price range. But instead the exercise price was consistently lower than the share price following the award. Interestingly, Crystal’s analysis shows that the statistically unexpected rise in share price after the award has continued even after the enactment of the Sarbanes Oxley Act. (Crystal estimates the probability of this outcome as a result of chance as “way less than 1-in-100 trillion.") His analysis suggests even after Sarbanes Oxley made it more difficult for CEOs to backdate options, they have continued to springload options grants.

Not Your Average Blogger: Attentive readers may have noticed that I have added my photograph to this blog. I am feeling defensive about my blogger identity as a result of Pew Internet & American Life Project survey of bloggers, which may be found here and is discussed in this July 20, 2006 Washington Post (registration required) article. According one source quoted in the Post article, “the average blogger is a 14-year old girl writing about her cat.” My newly added picture is your assurance that I am, let us say, well over 14 years old and that posts about my cats (I have two of them, actually) will never appear on this blog. Disappointed cat lovers are directed here.

Counting the Options Backdating Lawsuits

The information in this post was last updated on May 27, 2008

The purpose of this blog post is to track options backdating related litigation. All of the companies that have been sued -- and of which the The D & O Diary is aware -- have been listed below. The D & O Diary will update this information as additional companies are sued, or as loyal readers advise The D & O Diary of any omissions. The D & O Diary will note at the top and bottom of this post the date on which the information was most recently updated, and will indicate in red which information has been most recently added. Readers interested in keeping up to date on the number of lawsuits will want to check back frequently. The running tallies below are meant to include a listing of any company that has been sued based on allegations of options timing manipulations, regardless whether the allegations are based on options backdating, options springloading, or hiring-related options timing.

Securities Fraud Class Actions (Total as of latest update = 38):

1. American Tower
2. Amkor Technology (see discussion of this case here)
3. Apple Computer
4. Apollo Group
5. Aspen Technology
6. Broadcom
7. Brocade Communications
8. Brooks Automation
9. Comverse Technology
10. Cyberonics
11. Hansen Natural Corporation
12. HCC Insurance Holdings
13. Jabil Circuit
14. Juniper Networks
15. KLA-Tencor
16. Marvell Technology Group
17. Maxim Integrated Products
18. Meade Instruments
19. Mercury Interactive
20. Michaels Stores
21. Monster Worldwide
22. Newpark Resources (see discussion of this case here)
23. Openwave Systems
24. PainCare Holdings (see discussion of this case here).
25. Quest Software
26. Rambus
27. SafeNet
28. Semtech
29. Sonic Solutions
30. Sunrise Senior Living
31. TeleTech Holdings
32. The Children's Place Retail Stores
33. Vitesse Semiconductor
34. United Health Group
35. UTStarcom
36. Wireless Facilities
37. Witness Systems
38. Zoran (see discussion of this case here).

Shareholders Derivative Lawsuits (Total as of latest update = 166):

1. Actel
2. Activision
3. Adobe Systems
4. Affiliated Computer Service
5. Affymetrix
6. Agile Software
7. Alkermes
8. Altera
9. American Tower
10. Amkor
11. Analog Devices
12. Apollo Group
13. Apple
14. Applied Micro Circuits
15. Arthrocare
16. Aspen Technology
17. Asyst
18. Atmel
19. Autodesk
20. Barnes and Noble
21. BEA Systems
22. Bed Bath and Beyond
23. Biomet
24. Black Box
25. Blue Coat
26. Boston Communications Group
27. Broadcom
28. Brocade Communications
29. Brooks Automation
30. CA, Inc.
31. Cable Vision Systems
32. Cardinal Health
33. Caremark Rx
34. Ceradyne
35. Cheesecake Factory
36. Children's Place Retail Stores
37. Chordiant Software
38. Cirrus Logic
39. Cisco Systems
40. Citrix Systems
41. Clorox
42. CNET Networks
43. Coherent
44. Computer Sciences Corp.
45. Comverse Technology
46. Corinthian College
47. Countrywide Financial Corp.
48. Crown Castle International
49. Cyberonics
50. Delta Petroleum
51. Dean Foods
52. Digital River
53. Ditech Networks
54. Eclipsys
55. Electronic Arts
56. Electronics for Imaging
57. Embarcadero Technologies
58. EMCORE
59. ePLUS
60. Equinix
61. F5 Networks
62. Family Dollar
63. Finisar
64. Flir Systems
65. Flowserve
66. Fossil
67. Foundry Networks
68. Getty Images
69. Glenayre Technologies
70. Hain Celestial Group
71. HCC Insurance Holding
72. Home Depot
73 Hansen Natural Corp.
74. Hot Topic
75. Hovnanian Enterprises
76. i2 Technologies
77. iBasis
78. Infosonics
79. Insight Enterprises
80. Integrated Silicon Solutions
81. Intuit
82. J2 Global Communications
83. Jabil Circuit
84. Juniper Networks
85. Jupitermedia Corp.
86. KB Homes
87. Keithley Instruments
88. KLA-Tencor
89. Kopin Corp.
90. KV Pharmaceutical
91. L-3 Communications Holding
92. Lehman Brothers Holdings
93. Linear Technology
94. M-Systems (see note below)
95. Marvell Technology
96. Mattel
97. Maxim Integrated
98. McAfee
99. Meade Instruments
100. Medarex
101. MercuryInteractive
102. Michael's Stores
103. Microtune
104. MIPS Technologies
105. Molex
106. Monster.com
107. MSC Industrial Direct
108. Nabors Industries
109. Network Appliance
110. Newpark Resources
111. Novell
112. Novellus
113. Nvidia
114. Nyfix
115. Openwave
116. Par Pharmaceuticals
117. Pediatrix
118. Peet's Coffee & Tea
119. Pool Corp.
120. PMC Sierra
121. Power Integrations
122. Progress Software
123. Quest Software
124. QuickLogic
125. Redback Networks
126. Rambus
127. Research in Motion
128. RSA Security
129. Safenet
130. Sanmina-SCI
131. Sapient
132. ScanSource
133. SecureLogic Corp.
134. Semtech
135. Sepracor
136. Sharper Image
137. Sigma Designs
138. Silicon Storage Tech
139. Sonic Solutions
140. Sonus Networks
141. SPSS
142. Staples
143. Sunrise Senior Living
144. Superior Industries International
145. Sycamore Networks
146. Take-Two Interactive
147. Tetra Tech
148. The First American Corp.
149. THQ
150. Trident Microsystems
151. TriQuint Semiconductor
152. Tyson Foods
153. Ultratech
154. Ulticom
155. United Healthcare
156. UTStarcom
157. Valeant
158. Verisign
159. Vitesse Semiconductor
160. Waste Connections
161. Western Digital Corp.
162. Westwood One
163. Wind River Systems
164. Witness Systems
165. Xilinx
166. Zoran Corp

ERISA or 401(k) Litigation (Total as of latest update = 5):

1. United Health Group

2. Affiliated Computer Services
3. Analog Devices
4. KB Homes
5. The Home Depot

In addition to these lawsuits, SanDisk Corporation has been sued in connection with its proposed acquisition of M-Systems. The defendants include not only SanDisk, but M-Systems and certain directors and officers of M-Systems. The lawsuits allege that the terms of the deal are not fair to M-Systems shareholders. In addition, the plaintiffs allege that the M-Systems officers and directors breached their fiduciary duty to M-Systems shareholders by backdating stock options and sought to further their own interests by approving the merger. A description of the lawsuit may be found here. Special thanks to Adam Savett of the Lies, Damned Lies blog for bringing this lawsuit to the attention of The D & O Diary.

Also, Sycamore Networks has been named in a lawsuit brought by a former employee, in which the former employee alleges that his employment contract was terminated because he complained about the company’s stock option practices. A Wall Street Journal article (subscription required) describing the lawsuit can be found here.


The information in this post was last updated on: February 9, 2008.

New Options Backdating Study Implicates Thousands of Companies

Erik Lie, the University of Iowa Business School professor whose research is widely credited with unlocking the emerging options backdating scandal, has published a new research paper concluding that practice of options backdating was far more widespread than current media reports suggest. According to Lie’s July 14, 2006 paper, written with Associate Professor Randall Heron of the University of Indiana Business School, “the alleged incidents of backdating that have surfaced in the media appear to represent merely the tip of the iceberg.”

The paper’s authors examined a sample of 39,888 stock option grants made to 7,774 companies' CEOs, Presidents and Chairmen of the Board, using information from the Thompson Financial Insider Filing database and insider transactions reported to the SEC. The study analyzed whether or not there were “abnormal [investment] returns around option grants.” The authors’ assumption is that, without manipulation, half the returns should be positive and half should be negative, but in fact the distribution was shifted upward. The authors used this analysis to infer the number of grants that were backdated or otherwise manipulated.

According to the authors, 13.6% of the grants studied were backdated or manipulated. Because grants that are scheduled to take place at the same time every year are more difficult to backdate or otherwise manipulate, the authors focused their attention on unscheduled grants that were in-the-money or at-the money. (Grants that were out-of-the-money, that is, with the exercise price below the share price on the grant date, presumptively were not the subject of manipulation.). The authors concluded that 18.9% of the unscheduled, in-the-money or at-the money option grants were backdated or otherwise manipulated. The authors also concluded that the practice was more widespread before August 29,2002, when the SEC implemented new rules requiring option grants to be filed within two days. The authors concluded that 23% of the unscheduled at-the-money grants between January 1, 1996 and August 29, 2002, and 10% of the unscheduled grants after August 29, 2002, were backdated or otherwise manipulated.

The number of backdated or otherwise manipulated grants is different from the number of firms that engaged in backdating. The authors compared expected and average actual options returns for the 7,774 companies in their data population to estimate that 29.2% of companies (or 2,270 companies) engaged in backdating or similar manipulation of grants to top executives at some point between 1996 and 2002. The authors also estimate that 16.1% of companies in the study engaged in backdating between August 29, 2002 and December 1, 2005.

The authors’ finding of continued backdating after the SEC’s August 29, 2002 implementation of the new filing rule may be partially understood by some companies’ apparent disregard for the new filing rules. The authors found that while 10% of the unscheduled at-the-money grants after August 29, 2002 were backdated or otherwise manipulated, the incidence was 19.9% for companies that filed their grants late, but only 7% for companies that filed within the required two business days.

The study also found that the incidence of unscheduled at-the-money grants that are backdated or otherwise manipulated is 20.1% among low tech firms but 32% among high tech firms; 23.1% among small firms (market capitalization within 20 days before the grant < $100 million), 27% among medium-sized firms ($100 million $1 billion); and 13.6% among the firms with the lowest one-third of share price volatility, 26.2% among the firms with the middle third level of share price volatility, and 29% among firms with the one-third highest level of volatility.

The study also concludes that smaller auditors (i.e., those other than the big five) are associated with more companies that backdated after August 29, 2002. Among the big five firms, PwC and KPMG are associated with less backdating before August 29, 2002, and PwC with less after August 29, 2002. However, the authors note that care should be taken in interpreting the backdating differences among the auditors, as the differences might reflect characteristics of the audited companies.

The New York Times July 17, 2005 article reporting on the new study quotes Professor Lie as saying that the widespread nature of options backdating is "pretty scary and quite surprising to me." The Times article also reports that Professor Lie said the findings were so surprising that he asked several colleagues to check his numbers, and they concluded that the numbers probably erred on the low side.

The D & O Diary notes that because the study is limited to analysis of grants made to the most senior company officials, the study necessarily omits companies that engaged in options timing practices for grants to other persons. For example, another option timing practice that has been the subject of scrutiny is the award of hiring-related options grants, whereby new hires or potential new hires were offered grants backdated to a date prior to their hire date, when the company’s share price was trading at a higher price. The backdating potentially made the options grant more attractive to potential new hires. Hiring-related options grants was the subject of a prior D & O Diary post, which may be found here.

Professor Lie’s Options Backdating website may be found here.

Options Backdating Criminal Charges Coming? An article in the July 14, 2006 issue of The Recorder predicts that Gregory Reyes, the ex-CEO of Brocade Communcations may be the first executive indicted in the options backdating scandal. Brocade was one of the first companies implicated in the scandal, as it restated its financials due to options related issues in January 2005. According to this February 13, 2006 Business Week article, Reyes blames one of the most prominent lawyers in Silicon Valley, Larry Sonsini of the Wilson Sonsini Goodrich & Rosati firm and a former member of Brocade's board, for the company's options problems. According to Reyes, Sonsini suggested a compensation structure in which Reyes sat as a "committee of one" and those could aware stock options at will. When stock options questions arose, Reyes said, Sonsini argued for him to resign. Sonsini is named as a defendant in the Consolidated Amended Complaint filed in the civil securites fraud class actions that has been filed against Brocade Communications. A WSJ.Com Law Blog post on the anticipated indictment can be found here.

According to a July 17, 2006 article on Bloomberg.com, after the first indictment, which is anticpated this week, "at least 12 more cases will probably follow." The Bloomberg.com article also quotes sources as saying that in the enforcement action this week, the SEC will probably file a civil case in tandem with criminal charges by the Justice Department. The Bloomberg.com article also notes that the June 2003 criminal complaint filed against Peregrine Systems encompassed a wide variety of charges including stock-option violations. The SEC's June 2003 complaint against Peregrine Systems can be found here (the stock options allegations are in paragraph 29).

Jupiter Networks Sued in Options Backdating Securities Class Action: According to a July 17, 2006 press release, Jupiter Networks has been named in a securities class action lawsuit based on allegations of improper options backdating. This brings the number of companies sued in securities class action lawsuit based on allegations of improper options backdating to nine. Prior D & O Diary post tallying the other eight lawsuits and identifying the companies previously sued can be found here and here and here.

Options Backdating Link: Readers interested in more regular servings of options backdating news may want to check out the Vangal blog, which may be found here. Tip of the hat to Adam Savett at the Lies, Damn Lies blog for the Vangal link. The Vangal blog apparently is affiliated with Vangal Strategy and Business Consulting, whose website describes the company as "the leading strategy consulting firm for high-velocity companies who are facing a crisis with Stock Options Backdating [and] and Spring-loading grants." A June 24, 2006 article in the San Jose Mercury News describing Vangal and other blogs discussing options backdating can be found here.

Corporate Governance and D & O Insurance

One of the least understood and least studied features of the world of corporate and securities law is the impact that directors’ and officers’ liability insurance has on companies' conduct. A new article by two University of Connecticut Law School professors, Tom Baker and Sean Griffith, represents an ambitious attempt to understand the impact of D & O insurance on corporate governance. The article, entitled “Predicting Corporate Governance Risk: Evidence from the Directors’ and Officers’ Liability Insurance Market” presents the authors’ theory that D & O insurance provides a deterrence function within corporate governance and securities law by forcing worse-governed firms to pay higher premiums than better-governed firms. Because the authors joined their analysis to detailed interviews of key players in the D & O insurance industry, the article does a praiseworthy job describing the industry and the broad outlines of the D & O underwriting process. The article's insights into the D & O underwriting process alone reward close reading.

However, The D & O Diary questions the article's authors' premise concerning D & O insurance underwriters’ ability to accurately segment securities litigation risk based upon the underwriters’ assessment of various companies’ corporate governance practices. The premise derives from some underwriters’ own statements of their belief in their ability to differentiate “deep governance” variables such as “culture” and “character.” Some underwriters may well believe they have those differentiation capabilities, but the reality is that D & O underwriters necessarily have only limited and brief access to senior company management and rarely see management engaged in unrehearsed activity. Underwriters who believe they truly can discern culture and character on this necessarily limited basis are, in reality, doing little more than their version of Johnny Carson's old Carnac the Magnificent routine, without the humor (or, one hopes, without the costume). In addition, even if D & O insurance rates may be adjusted at the margins for governance factors, the rates themselves are largely driven by the insurance cycle, which for most companies is a much more important factor than corporate governance practices in determining the ultimate price that the companies will pay for its D & O insurance. Because of the impact of the cycle and the level of competition within the D & O insurance industry, it would be difficult to quantify any cost savings a company could realize through better corporate governance. Because the financial link between premium levels and governance practices is so indeterminate, the deterrence role of D & O insurance in corporate governance is theoretical at best. Finally, The D & O Diary questions whether D & O insurance premiums alone could be sufficient to perform the significant role that the article’s authors postulate; for most companies, their D & O insurance premium is just another cost of doing business. Companies who can be persuaded to improve their corporate governance practices will do so out of fear of litigation or of government regulators, or because they simply want to do the right thing; the expectations or requirements of D & O underwriters, by comparison, are unlikely to be as important --with all due respect to my many good friends in the D & O underwriting community. (In fairness to the article's authors, the D & O Diary acknowledges that the article recognizes all of the considerations raised in this post; the article simply draws different conclusions. )

All of these concerns notwithstanding, the article does represent an unprecedented and important academic attempt to understand how D & O insurance really works, and in particular, the article’s authors’ methodology of developing a deeper understanding of the D & O insurance industry through interviews with industry professionals represents an important academic innovation. The D & O Diary suggests that this methodology could very productively be used to develop a better understanding of the true role of D & O insurance in the settlement of shareholders’ securities fraud claims.

Full disclosure: the author of The D & O Diary was interviewed by one of article's authors in connection with the empirical research on which their article is based.

A tip of the hat to Adam Savett of the Lies, Damned Lies blog for providing a link to the article.

Aux Armes, Citoyens! Formez Vos Bataillons! Given the level of media coverage, it is hardly surprising that plaintiffs’ lawyers have sought to secure their place in the options backdating litigation battlefield by announcing, for example, that they have formed an “Options Backdating Investigation Division”, or that they are investigating 48 different companies or “over 50 companies.” Perhaps inevitably, the first entrant from the defense bar into this escalating press release arms race has now appeared. On July 10, 2006, the Proskauer Rose law firm announced that it has formed a “Stock Options Task Force,” which, their press release explains, is a special multidisciplinary group of over 20 lawyers that will work with companies on stock option timing issues. None of this is surprising to The D & O Diary, since I predicted in my very first post on options backdating that the issue would be “this year’s model” of the Lawyers’ Relief Act.

In a much more ominous development on the options backdating front, Kevin Ryan, U. S. Attorney's Office in San Francisco announced on July 13, 2006 that his office has formed its own stock options backdating task force. The team is responsible for investigating companies and individuals in Northern California who retroactively changed the dates of stock options with the intent to defraud. According to this post in the wsj.com law blog, the Mr. Ryan's office's press release stated that the task force "will bring criminal charge when appropriate."

Head Case: On the theory that anything that is the subject of a front page article in the Wall Street Journal (subscription required) is a suitable topic for this Internet weblog, The D & O Diary has decided to weigh in on the Zidane head butt controversy -- possibly the only story this year that has gotten more widespread media coverage than options backdating. First, we would like to introduce as Defense Exhibit No. 1 the following link to an extensive video portfolio of the misbehavior of Marco Materazzi on prior occasions, which may explain what may have preceded Zidane’s now infamous head butt of Signore Materazzi. Second, in the interests of world peace and understanding, The D & O Diary would like to introduce as Defense Exhibit No.2 the following link as proof that there are a lot of people out there with a lot of time on their hands to exploit the humor in any situation, even the video footage of Monsieur Zidane's head butt. (Does anyone remember who won the game?)

SOX Whistleblower and FCPA Updates and Other Notes from Around the Web

Sarbanes-Oxley Act Whistleblower Updates: In a May 31, 2006 ruling, an Administrative Review Board (ARB) of the U.S. Department of Labor has answered two important questions arising Section 806 of the Sarbanes-Oxley Act, the so-called Whistleblower provisions. (Prior D & O Diary posts regarding the Sarbanes-Oxley Whistleblower provisions can be found here and here.). First, the ARB held that the nonpublicly traded subsidiary of a publicly traded company can be a proper defendant in a Sarbanes-Oxley Whistleblower case if the subsidiary acted as an agent for the public company. The determination is one of fact, based upon the subsidiary’s attributes of agency, rather than one of law based on the organizational relationship between the parent and the sub. This holding is significant because it was not previously clear whether the Whistleblower protection would extend to the employee of a private sub of a public company; while the issue is one of fact, the possibility of extension broadens the scope of potential defendants. Second, the ARB also held that it does not matter whether or not the employee who is claiming retaliation did not believe that anything fraudulent had occurred so long as the employee reasonably believed that an SEC rule or other subject "in the realm covered by" the Act had been violated. Both of these holdings tend to broaden the potential scope of Sarbanes Oxley Whistleblower protection and confirm the D & O Diary’s view that the Whistleblower provisions have the potential to become a very serious concern for employers. A discussion of this case can be found in a July 6, 2006 post on Broc Romanek’s CorporateCounsel.net blog.

In an update on the original Sarbanes-Oxley Whistleblower action, cfo.com reports in a July 7, 2006 post that the Department of Labor has intervened on behalf of David Welch, the former CFO of Cardinal Bankshares whom an administrative law judge has ordered to be reinstated. The post also reports that Welch has filed a U.S. District Court complaint to force the company to comply with the ALJ’s order. The D & O Diary’s prior post on the Cardinal Bankshares case can be found here.

Another interesting issue under the Sarbanes Oxley Whistleblower provision is its extraterritorial applicability. A July 7, 2006 post on law.com entitled "SOX Whistleblower Rule Triggers a Continental Divide" discusses the struggle between regulatory authorities in the US and in the EU over the applicability and requirements of the Sarbanes Oxley Whistleblower provisions, and in particular the potential conflict between the whistleblower data gathering requirements and EU data protection and privacy laws.

Foreign Corrupt Practices Act Update: On July 5, 2006, the SEC announced simultaneous filing of FCPA charges against and the agreement to settle by four former employees of ABB. The SEC alleges that the four individuals participated in a scheme to pay bribes to Bonga Oil Field. The complaint alleges that as a result of the four defendants’ actions, ABB paid officials at the Nigerian state-owned oil production and exploration agency approximately $1 million in bribes. The four consented to entry of judgment against them without admitting or denying the allegations, and agreed to pay fines ranging between $40,000 and $50,000. One of the four also paid approximately $60,000 in disgorgement and interest. ABB itself previously agreed to final judgment in connection with these and other illicit payments, and consented to pay $5.9 million in disgorgement and interest and an ABB subsidiary agreed to pay a civil penalty of $10.5 million.

Who (if anyone) will succeed Milberg Weiss?: The July 7, 2006 New York Times (registration required) has an article reviewing the efforts of the various securities class action plaintiffs’ firms to jockey for position while Milberg Weiss struggles to defend itself against its own criminal indictment. At least for purposes of the Times article, the other plaintiffs’ firms are doing a surprisingly good job at maintaining the appearance of decorum. But even if the other firms can restrain themselves from the outward appearance of seeking to profit from Milberg Weiss’ misfortune, the real pressure on the Milberg Weiss firm will come from the decisions of the various lead plaintiffs the firm represents, as to whether the indicted firm appropriately should be representing the class on whose behalf the lead plaintiff is acting. Here is a link to a May 20, 2006 Wall Street Journal (subscription required) article reviewing various cases where the lead plaintiffs have decided to remove the Milberg Weiss firm from the cases as a result of the firm’s indictment.

Options Backdating and the SOX Clawback Provisions: UCLA Law School Professor Stephen Bainbridge has a July 6, 2006 post on his ProfessorBainbridge.com blog discussing whether or not the options backdating scandal will provide the first occasion for the implementation of the clawback provisions under Section 304 of the Sarbanes Oxley Act. The clawback provisions require executives at companies that restate their financials to return to their companies bonus compensation the executives received in the 12 months following the original issuance of the later-restated financials. Professor Bainbridge, who is critical of the clawback provision, is unaware of any attempts to date to use the clawback provisions in connection the options backdating investigations. The comments that accompany his post raise the interesting question whether the clawback provisions can be applied to require disgorgement of compensation awarded following restatement of financials that were originally created prior to the enactment of the Sarbanes-Oxley Act. A prior D & O Diary post commenting on the possible applicability of the clawback provisions to companies involved in the options backdating investigation may be found here.

SOX and Non-Profit Organizations: One of the more interesting consequences of the enactment of the Sarbanes-Oxley Act has been the statute’s application far beyond the public company arena to which it was primarily addressed. A July 7, 2006 post on the accountingweb.com details the impact that the Act is having in the non-profit sector. A May 2006 article by The D & O Diary’s author describing the Act’s impact on privately held companies can be found here.

Options Backdating Securities Litigation Update (and other Notes and Comments)

Options Backdating Securities Litigation: On June 29, 2006, a putative securities fraud class action was initiated against KLA-Tencor. This brings the number the number of companies sued in securities fraud class action lawsuits based on options timing allegations to eight. Background on the other seven companies previously named can be found on prior D & O Diary posts here and here. In addition, Apple Computers announced on July 5, 2006 that it had been sued in two derivative action based upon its awarding of stock option grants.

Mercury Interactive Restatement: A sense of the magnitude of the problems that options backdating can cause can be found in Mercury Interactive’s July 3, 2006 release of its restated financials. Among other things, the company reported that as a result of problems surrounding its options practices it would restate its earnings before taxes for the period 1992 through 2004 downward by $566.7 million. All told, the company’s special investigative committee found 55 instances in which “the exercise price of stock options was established based on a stated grant date that was different from the actual grant date.” Jack Cielski has a detailed review of Mercury’s options practices and the resulting accounting mess in a July 6, 2006 post on the AAO Weblog.

Mercury Interactive also announced that on June 23, 2006, the SEC staff provided three of the company’s outside directors with “Wells” notices, signifying the staff’s intent to pursue charges against the individuals. A July 6, 2006 post on the ISS Securities Litigation Watch blog points out that it is "quite unusual" for the SEC to pursue outside directors in connection with financial problems at the company on whose board they serve, but that appears to be the direction the SEC is headed in connection with the Mercury Interactive mess. (The SEC also served Wells notices on outside directors of the Hollinger Corporation, as discussed here.) The July 5, 2006 Wall Street Journal (subscription required) article describing Mercury Interactive’s restatement and its directors receipt of Wells notices may be found here.

In a related development, on July 5, 2006, Opsware announced that its CFO had received a “Wells” notice pertaining to her prior service as Mecury Interactive’s CFO.

Ken Lay’s Death and the Resurrection of D & O Coverage? It may be an idle question on my part, but a July 5, 2006 note on Professor Peter Henning’s White Collar Crime Prof blog has left me wondering about the D & O insurance implications arising from the legal effects of Ken Lay’s death. Professor Henning reports that under established Fifth Circuit precedent, a criminal defendant’s death during the pendency of an appeal “abates, ab initio, the entire criminal proceeding.” Under United States v. Estate of Parsons, 367 F.3d 409) (5th Cir. 2004), “the appeal does not just disappear….Instead, everything associated with the case is extinguished, leaving the defendant as if he had never been indicted or convicted.” Now, it may well be that the available D & O insurance was exhausted long ago, and it may be that the applicable policy language differs in a way that avoids this whole line of analysis. But assume for the sake of discussion that the applicable policy had the standard “after adjudication” language in the criminal conduct exclusion, pursuant to which the exclusion precludes coverage only upon final adjudication of criminality. There is no question that a jury of 12 persons good and true found Ken Lay guilty of multiple criminal acts. But if his death operates to leave him “as if he had never been indicted or convicted,” does the exclusion apply? Or would his death resurrect coverage, or rather remove the obstacle to coverage? The entire question may be moot due to the exhaustion of coverage, and because the lead plaintiff in the pending civil securities action against Lay (as quoted in the July 6, 2006 Times of London), has stated publicly that it does not expect to pursue the case against Mr. Lay’s estate. But it is still an interesting question, albeit based upon a fact pattern that presumably will not frequently recur...

A July 7, 2006 Wall Street Journal (subscription required) article discussing the legal effects of Ken Lay's death, as well as the financial condition of his estate, can be found here.