Sox and backdating

The reason for the increases has been put down to the increased time and effort that goes into attending a handful of board meetings during the year when there's increased regulation and scrutiny from Sarbanes-Oxley and regulators.Yep, the six degrees theory does not include investors.Or as the SEC's former accountant Lynn Turner told Bloomberg: ''The closely knit network of directors for these companies smells of good old boy cronyism directly facilitating the interests of the CEOs rather than investors." Still, the directors themselves might be also be benefitting from the close connections.Company directors gave themselves huge pay rises in 2006, right along with their CEOs, according to .FH Partners was unable to cite to any authority “for the proposition that a retroactive effective date in one contract can be construed to have an automatic retroactive effect on a separate contract,” which would probably have been fatal to its case.But the language of the FDIC/FH Partners agreements further undermined FH Partners’ arguments because the documents (1) stated that they couldn’t be amended or waived except in a writing signed by the parties, (2) didn’t anticipate that the FDIC could modify what it was conveying to FH Partners after closing, (3) conveyed the FDIC’s interest “as of the Loan Sale Closing Date,” (4) transferred the FDIC’s interest in the loan “as is,” (5) provided that the FDIC would “have no obligation to secure or obtain any missing intervening assignment or any assignment to [the FDIC] that is not contained in the Loan File,” (6) provided a process by which FH Partners could require the FDIC to repurchase a loan if it was determined that the FDIC didn’t own it as of the closing, and (7) transferred the FDIC’s rights “at the time of closing.” The appellate court stated, “We necessarily conclude that the FDIC/FH Loan Sale Documents unambiguously anticipated that the FDIC might very well be conveying to FH Partners less than perfect, and even non-existent, title to Loan A and Loan B.

On appeal, the Missouri Court of Appeals, Western District agreed.For a shorter piece with a few practical tips see Backdating – it’s illegal isn’t it?Setting aside such issues, avoiding unwanted side effects of backdating contracts can be tricky, especially when the purported effective date of an agreement is several months before the date it was actually signed, as can be seen in involves the ownership of a promissory note that was made to a bank in connection with a loan.Based on that study, it's not surprising that there's now evidence showing that directors might have spread options backdating.As the Wharton study suggests, it's not what you know but who you know that counts.It’s not unusual for parties to a contract to want the written agreement to cover a period before it’s actually signed.There are any number of contexts where this comes up — some legitimate and others not exactly aboveboard — but the logistics of negotiating and signing contracts are such that the issue is unavoidable.As to the first issue, the transaction between the FDIC and Weatherford couldn’t have retroactive effect unless the parties showed a clear intent for the transaction to be retroactive.The court stated the general rule that “a written contract becomes binding when it is finally executed or delivered, unless a different intent appears.” Although the face of the main agreement in the FDIC/Weatherford transaction expressed an intended effective date of November 7, 2008, ancillary documents signed in connection with the transaction weren’t backdated, and the main agreement didn’t explain why it was backdated.FH Partners argued on appeal that, although the FDIC didn’t own the loan on December 16, 2008, the FDIC’s backdated transaction with Weatherford remedied the problem retroactively.The appellate court determined two separate issues: (1) whether the FDIC’s June 10, 2009 transaction with Weatherford was effective to retroactively transfer the loan to the FDIC as between the FDIC and Weatherford and (2) whether a retroactive effect applied to the FDIC’s earlier transaction with FH Partners.