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CH5 - Cutter claims that it had to pay Wiederhorn 6 million...

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CH5: Brief Case 5.2 Fog cutter Capital Group, Inc, v. securities and exchange commission Facts: Wiederhorn founded Fog Cutter and controlled more than 50% of Fog Cutter’s stock. The firm agreed that if Wiederhorn was terminated “for cause” he was entitled to his slary. If he is terminated “without cause,” he would be owed three times his annual salary, bonus from previous three years, and any unpaid salary and bonus. Wiederhorn became the target of an investigation into the collapse of Capital consultants, LLC in 2001. Then he redefined “cause” to cover only a feony involving Fog Cutter. In june 2004 Wiederhorn agreed to plead guilty and according to the agreement, he gets to keep his title, salary, bonus and 2 million leave of absence payment. In july, NASD delisted Fog Cutter from the Nasdaq. Fog Cutter appealed this decision to the SEC, which dismissed the appeal. Fog Cutter argues the decision is the best interest of its shareholders. Fog
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Unformatted text preview: Cutter claims that it had to pay Wiederhorn 6 million if terminate him by “without cause.” Issue: Fog Cutter was not convicted of a violation of the law. Rule: The U.S. Court of appeals for the District of Columbia circuit denied Fog Cutter’s petition for review of the SEC’s decision. The NASD was concerned with “the integrity and the public’s perception of the Nasdaq exchange” in light of Wiederhorn’s legal troubles and the Fog Cutter board’s acquiescence to his demands. The SEC “amply supported these concerns and was well within its authority to dismiss For’s” appeal. Vocabulary Cost-benefit analysis – a decision-making technique that involves weighing the costs of a given action against the benefits of the action. Ethics – moral principles and values applied to social behavior....
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