June 2013 archive

New Guidelines for Fraud Deterrence

The Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) has released an updated Internal Control – Integrated Framework in the fight against fraud.  It provides expanded practical advice regarding effective implementation of internal controls.  COSO is a joint initiative of five private sector organizations with a shared interest in enterprise risk management, internal control and fraud …

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Whistleblower protection does not require fraud on shareholders

A recent decision has clarified the reach of the protections offered to whistleblowers under Section 806 of the Sarbanes-Oxley Act of 2002 (“SOX”).  In the matter of Lockheed Martin Corporation v. Administrative Review Board, United States Department of Labor, it has been determined that SOX whistleblower protection extends beyond employee reporting of frauds on shareholders.  …

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Medical Device Manufacturers May be Fighting More Personal Injury Lawsuits in the Near Future

The 2008 Supreme Court ruling in Riegel v. Medtronic held that if a medical device passed the Food and Drug Administration’s (FDA’s) safety review and received premarket approval, federal law barred common-law state claims that challenge the device’s saftey and effectiveness or whether it was being marketed consistent with FDA premarket approval.  Since this ruling, some …

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SEC Whistleblowers Rewarded

The Securities and Exchange Commission(“SEC”)  announced the agency has approved its second Dodd-Frank whistleblower award since the program’s 2011 inception, this time to three individuals who were each deemed to have provided information related to a $7.5 million enforcement action that was (i) voluntary, (ii) original, and (iii) led to the successful result. The SEC’s “fact …

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Statute of Limitations Interpretation on Filing a Medical Malpractice Suit May Vary Even Within States

Many states have laws requiring patients to file medical malpractice claims by a defined time period.  If the patient misses the defined time period, he/she may see the claim quickly tossed.   However, a recent Wyoming Supreme Court reversed a malpractice ruling citing that the District Court Judge wrongly ruled that plaintiff failed to timely file …

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Federal Circuit leaves large damage award stand

The Federal Circuit affirmed a $391 million damage award in Versata Software, Inc. v. SAPAmerica, Inc., No. 2012-1029, -1049 (Fed. Cir. May 1, 2013). In reviewing the damage portion of the ruling, one cannot help but wonder about the damages calculation strategy that the defendant employed. The Federal Circuit summarized the parties and the infringement …

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AICPA issues Financial Reporting Framework for Small and Medium Sized Entities

The AICPA has issued a new Financial Reporting Framework (“FFR”) for Small and Medium Sized Entities (“SMEs).  These smaller enterprises are often not required to prepare financial statements in accordance with Generally Accepted Accounting Principles (“GAAP”).  Yet all financial statements are presented in accordance with some financial reporting framework, however defined.  This new FFR provides …

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Federal Circuit Reiterates Reasonable Royalty Principles

The Federal Circuit in re: Douglas Dynamics, LLC v. Buyers Product Company (Fed. Cir. May 21, 2013) provides reminders of how reasonable royalty damages must be calculated, and then remanded the damages verdict for retrial. The Federal Circuit succinctly summarized the parties and their products as follows: “Douglas and Buyers both manufacture snowplow assemblies for …

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“Shark Tank” Doesn’t Get Venture Capital Valuation Right

ABC’s popular TV show, “Shark Tank,” shows negotiations between entrepreneurs and five Venture Capital (VC) investors (“the Sharks”). Before describing their company, business owners typically make a request in the following form: X thousands of dollars in exchange of Y percent ownership in the company. For example, in a recent episode, the two owners of …

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More Than 10% of US Adults Were Victims of Fraud in 2011

A recent report by the Federal Trade Commission (“FTC”) entitled “Consumer Fraud in the United States, 2011: The Third FTC Survey” provides some interesting statistics on the prevalence of fraud.  The underlying consumer surveys revealed that during 2011 an estimated 10.8 % of U.S. adults (25.6 million people) were a victim of one or more of an estimated total …

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