Case s ummary: Person DE was serving as the chief financial officer for a company REC. The company was an electricity distributor in some parts of North Dakota. Company, REC was taking over a company, DGI that was distributing natural gas within the premises of North Dakota. DE went for a trip with his uncle EW. During the trip, DE told his uncle that he has been investing a lot of extra time in company REC as it was taking over the natural gas distributing company DGI. Person EW purchased a stock of
To f ind : The person who will be authorized to certify the accuracy of the financial statement of REC under Sarbanes Oxley Act.
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Chapter 28 Solutions
The Legal Environment of Business: Text and Cases
- Parker and Phillips incorporated P & P Resorts Inc., a closely held Texas corporation. Parker was president and Phillips served as vice president and director for operations. Parker owned 40% of the stock, while Phillips owned 60%. Both men met with CTA, a group of travel agents from California to discuss special deals for booking groups into the resorts. After the first meeting, all contracts with CTA were made by Phillips, who learned that there was a good chance that CTA would award the contract to P&P Resorts. Phillips incorporated Travel Brokers and was its sole owner. Phillips used P& P Resort’s time to work on proposals for Travel Brokers and managed to keep negotiations with CTA a secret from Parker. When Parker discovered Phillip’s actions, he filed suit against him for wrongfully taking a corporate opportunity from P &P Resorts. Phillips claimed that he did not take a corporate opportunity because Travel Brokers did not have the financial ability to…arrow_forward7arrow_forwardBernard Koch was president of United Corporation, a closely held corporation. Koch, James Trent, and Henry Phillips made up the three-person board of directors. At a meeting of the board, Trent was elected president, replacing Koch. At the same meeting, Trent attempted to have the salary of the president increased. He was unable to obtain board approval of the increase because, although Phillips voted for the increase, Koch voted against it. Trent was disqualified from voting by the corporation’s charter. As a result, the directors, by a two-to-one vote, amended the bylaws to provide for the appointment of an executive committee composed of three reputable businesspersons to pass upon and fix all matters of salary for employees of the corporation. Subsequently, the executive committee, consisting of Jane Jones, James Black, and William Johnson, increased the salary of the president. Will Koch succeed in an appropriate action against the corporation, Trent, and Phillips to enjoin them…arrow_forward
- Muller, a shareholder of SCM, brought an action against SCM over his unsuccessful negotiations to purchase some of SCM’s assets overseas. He then formed a shareholder committee to challenge the position of SCM’s management in that suit. To conduct a proxy battle for management control at the next election of directors, the committee sought to obtain the list of shareholders who would be eligible to vote. At the time, however, no member of the committee had owned stock in SCM for the six-month period required to gain access to such information. Then Lopez, a former SCM executive and a shareholder for more than one year, joined the committee and demanded to be allowed to inspect the minutes of SCM shareholder proceedings and to gain access to the current shareholder list. His stated reason for making the demand was to solicit proxies in support of those the committee had nominated for positions as directors. Lopez brought this action after SCM rejected this demand. Will Lopez succeed?arrow_forwardSipho, Nandi and Brian are shareholders in a private company, Sideline (Pty) Ltd. Sipho holds 10 ordinary shares, Nandi holds 60 cumulative preference shares and Brian holds 15 ordinary shares. The director of the company, who is Nandi’s husband Enzo, is in financial difficulty. He asks Nandi to approve a loan of R50 000 to him, which she does. Sipho and Brian find out about this and are very unhappy since there was no shareholder meeting to approve the loan. Advise Sipho and Brian whether there are any remedies for them to set aside the decision made by Nandi or to recover the money from Nandi personally. (9)arrow_forwardWhat is the nature of liability of limited partners as to limited partnership debts or obligations? A. They are liable up to the extent of their capital contribution only B. They are liable pro-rata up to the extent of their separate assets after the partnership assets are exhausted C. They are liable pro-rata up to the extent of their capital contribution only D. They are liable equally up to the extent of their separate assets after the partnership assets are exhaustedarrow_forward
- Dell is among the world leaders for manufacturing PC, mobile, tablets, and other hardware accessories. The company, headquartered in Round Rock, Texas, has about 160,000 employees around the world. The buyout of Dell Computers was completed in October 2013. Michael Dell—the company’s founder and chief executive officer (CEO)—and Silver Lake Partners took the company private for $24.4 billion. The company's shares were delisted from both the Nasdaq and the Hong Kong Stock Exchange before going private. After spending more than five years as a private company, Dell went public again in 2018. The company did so by repurchasing tracking shares in software company VMWare. The deal was worth roughly $24 billion. Michael Dell said he was able to transform the company while it was private. Dell shares began trading on the New York Stock Exchange (NYSE) at $46. As of March 25, 2020, the company's market capitalization was estimated at $28.3 billion. Required Prior to the buyout in October,…arrow_forwardCarl, a credit officer for U Bank, evaluates and approves extensions of credit to bank clients. He has access to nonpublic information about clients' earnings, performance, acquisitions, and business plans. U Bank caters to a very wealthy clientele and Carl frequently travels to meet potential clients for lunch dates at fancy restaurants. Carl contracts privately with Rubin, an independent accountant, to sell securities based on bank client information. Rubin believes Carl is very smart and has a "nose for business." Rubin trades securities of more than 10 different companies and both men profited more than $5 million over five years. On the way to a business meeting with a potential new bank client, Carl stops at Rubin's house to discuss business dealings and have a few drinks. Carl leaves Rubin's house drunk and is killed when his car strikes a tree. Carl's family sues U Bank for Carl's death. Rubin, discovering the investment scheme perpetrated by Carl, sues U Bank when he is…arrow_forwardCarl, a credit officer for U Bank, evaluates and approves extensions of credit to bank clients. He has access to nonpublic information about clients' earnings, performance, acquisitions, and business plans. U Bank caters to a very wealthy clientele and Carl frequently travels to meet potential clients for lunch dates at fancy restaurants. Carl contracts privately with Rubin, an independent accountant, to sell securities based on bank client information. Rubin believes Carl is very smart and has a "nose for business." Rubin trades securities of more than 10 different companies and both men profited more than $5 million over five years. On the way to a business meeting with a potential new bank client, Carl stops at Rubin's house to discuss business dealings and have a few drinks. Carl leaves Rubin's house drunk and is killed when his car strikes a tree. Carl's family sues U Bank for Carl's death. Rubin, discovering the investment scheme perpetrated by Carl, sues U Bank when he is…arrow_forward
- Clear Field Cheese Company Case Andy Reisinger, CIO, and Sandy Knight, CSCO, of the Clearfield Cheese Company in central Pennsylvania had just returned from a meeting with Tom Powers, who was the CEO of the company. Andy and Sandy were both feeling the pressure of the competitive problems that Tom had presented in their weekly senior staff meeting. It was clear that Clearfield Cheese Company faced challenging market conditions. Background Clearfield Cheese Company was established in 1931 by two brothers, Ted and Terry Edwards, in Clearfield, which is located in an agricultural area in central Pennsylvania. At the time, the U.S. economy was in the throes of a severe economic depression. The local dairy farmers were experiencing financial duress because they could not sell their milk at a price which would cover their costs. Part of the problem was transporting the milk to Pittsburgh and other larger cities at a landed cost that was competitive with farmers in Ohio. The Edwards brothers…arrow_forwardWhat does the term "Affiliated Party mean? ΟΛ Any person who directs or participates in the conduct of alluss of a bourse and who is an officer, stockholder, owney or other person who directly controls a com Any person who is related to the writing insurance agent and works for the same based insurance comparty Any person who has the authority to bind the insurer to the risk of being assumed without requiring a bone or appointment Every group, association or other organization that prepares policy forms and makes underwriting rules axikvit to the setting of rates and underwing clos B. OC O Darrow_forwardAt the end of 2001, Lehnhoff Inc. had $75 million in cash on its balance sheet. During 2002, the following eventsoccurred. The cash flow from Lehnhoff’s operating activities totaled $325 million. Lehnhoff issued $500 million incommon stock. Lehnhoff’s notes payable decreased by $100 million. Lehnhoff purchased fixed assets totaling $600million. How much cash did Lehnhoff Inc. have on its balance sheet at the end of 2002?arrow_forward
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