Archive for the ‘20-F Annotated’ Category

In re GSK, after Paxil comes Avandia

Tuesday, June 26th, 2007

Drugs have landed GlaxoSmithKline Plc (LSE, NYSE: GSK) in the docket, again. Two years ago it was securities fraud claims surrounding Paxil - in the UK marketed under the name Seroxat - two weeks ago it was the drug Avandia. See the 2005 action’s press release and the 2007 action’s complaint (07 Civ. 5574, SDNY).

Plaintiffs’ Counsel: Scott + Scott LLC (2005) and Kaplan Fox & Kilsheimer LLP (2007)

The current status of the earlier action, In re GlaxoSmithKline Sec. Litig. (05 Civ. 3751, SDNY) filed in May 2005, is that the second amended complaint was dismissed in October 2006: “Plaintiff has failed to state a primary violation of the securities laws under section 10(b). Without a primary violation, there can be no secondary, or derivative, violation under Section 20(a). Accordingly, Plaintiff’s Section 20(a) claim is also dismissed.” (cited in In re NTL Sec. Litig.) An appeal had been filed with the US Court of Appeals for the Second Circuit. (Also see GSK’s 2006 Annual Report, p.163 (165 of 192).)

After having read the complaint in the current action (filed 11 June), for more information see the following GSK communications:

  • press release in response to New England Journal of Medicine editorials (5 June)
  • press release regarding data from RECORD study in relation to Avandia (5 June)
  • statement of Moncef Slaoui, PhD, GSK Chairman Research & Development in testimony before the House Committee on Oversight and Government Reform (6 June)

A GSK spokesperson has, in line with its policy not to comment on individual lawsuits, submitted the following in response to a request for comment concerning the current action:

We will vigorously defend our medicine. GSK has acted responsibly, transparently and with the best interest of patients in mind. Any fair examination of the company’s record will show that GSK has been transparent in its efforts to thoroughly study the safety and effectiveness of Avandia, and to widely communicate that information to governments, regulatory authorities, scientific peers, physicians and others in a variety of ways.

The proposed Class Period is the period between 27 October 2005 and 21 May 2007, inclusive. The deadline to apply for Lead Plaintiff status is 10 August 2007.

AGM: BP, DaimlerChrsyler

Monday, April 16th, 2007

Further to the annotations to the BP Plc 20-F and DaimlerChrysler AG 20-F, the AGMs have now taken place and the results are in.

To start with the latter, the Wenger/Knoll motions did not survive: ‘more than 90%’ of shares voted against the motions, according to a DaimlerChrysler spokesperson. Dropping the Chrysler name to go back to Daimler AG and the pending disposal entirely of the unit may have generated more headlines and copy, it would have been interesting to see if or how the audit of the merger, if the motion for it were approved, would have an influence in the courts where litigation relating to that transaction is pending.

As an aside, you may be interested to take note of two papers in which DaimlerChrysler plays a prominent role: DaimlerChrysler AG, the First Truly Global Share (abstract), which uses the trading and settlement of the DCX single global registered share as an “interesting test of different hypotheses about multi-market trading, global competition for order flow and liquidity”, and The Saga of Daimler Chrysler (subtitle, abstract), which uses “the DaimlerChrysler events to generate unique evidence on the extent to which two methods - disclosure requirements and corporate governance standards - can substitute for one another in protecting minority shareholders from expropriation.”

BP’s management too saw off ‘dissident’ shareholders; subject of contention there (as it is in the derivative action pending against it; see previous post) was the pay package awarded to Lord Browne. As reported in the Financial Times (subscription required), ‘more than a fifth of votes cast failed to back [BP’s] executive pay plan’. Michael McKersie, Assistant Director of Investment Affairs at the Association of British Insurers is quoted in the same article: “This was certainly a larger number voting against than you would normally see.”

20-F Annotated: DaimlerChrysler AG 2006

Friday, March 23rd, 2007

The merger between Daimler-Benz AG and Chrysler Corporation in 1998 that created DaimlerChrysler AG (Deutsche Börse, NYSE: DCX) has spawned several legal proceedings (Rechtliche Verfahren), both in Germany and the US, of which some are still ongoing. The latest annual report (Geschäftsbericht, in German, or here in English; SEC Form 20-F filing) details three such proceedings (report from p.194 (210 of 237); form from p.95). One is a securities class action in Germany, the other two are in the US, a direct action and a securities class action.

The two class actions are discussed in this previous post; DaimlerChrysler has appealed the German decision, plaintiffs the US one (see here for the January 2006 opinion and order of the US action).

The direct action, containing allegations similar to the class action’s, was filed by Tracinda Corporation in 2000. Result so far: “On April 7, 2005, the United States District Court for the District of Delaware rendered a judgment in favor of the defendants and against Tracinda Corporation on all claims finding that there had been no fraud and no violation of U.S. securities laws. Tracinda appealed the decision to the United States Court of Appeals for the Third Circuit in January 2006, which heard oral arguments in September 2006. Its decision is pending.” (form p.98)

That was then. Now that the post-merger (or is that ‘post-takeover’) entity has stated that “all options” are open regarding Chrysler however, in what could be seen as or possibly have the effect of a reversal of the merger, it was only appropriate more legal action would follow.

Two shareholders, Prof Dr Ekkehard Wenger and Dr Leonhard Knoll, have succeeded in extending the agenda of the company’s AGM (Hauptversammlung) with several motions, one of which, if approved, will require an audit of the valuation of Chrysler and the conversion ratio used in the merger. (Also see the Wall Street Journal (subscription required)).

The extension was published in the German Federal Gazette (Bundesanzeiger (Antrag 18, p.4), in German, with thanks to Hans-Martin Buhlmann of German proxy agent Vereinigung Institutionelle Privatanleger eV, or here in English (Motion 18, p.8).

Wenger and Knoll base their motion on statements made by the Stuttgart District Court in its August 2006 decision, which DaimlerChrysler has appealed against (as noted above): “[T]he District Court… arrived at the conclusion that there had been a serious misevaluation by the partners in the business combination [and so we find] there should be an investigation to determine whether those responsible can be called to account.”

DaimlerChrysler’s response to that and the other motions: “There are no grounds for the special audits requested. Some of the motions relate to ongoing proceedings and official investigations that are not expected to produce any findings beyond the findings already established through those current proceedings… [A] special audit cannot be expected to provide any additional benefit.” (p.8/p.15)

Details of the AGM, to be held on 4 April in Berlin, can be found here (in German, or here in English). (Subscribe to WV&Z here.)

20-F Annotated: BP Plc

Thursday, March 15th, 2007

As discussed in this previous post, BP Plc (LSE, NYSE: BP) and its chief executive Lord Browne of Madingley, are defendants in a derivative action in the US. Last week the company released its annual report (SEC Form 20-F filing) for 2006. Two brief notes on the report, regarding Lord Browne’s compensation and BP’s legal proceedings.

Lord Browne’s total pay - his compensation is also a subject of the action - was cut last year, by 23 per cent from £3.29 million to £2.53 million. (Or, as the Financial Times includes his vested shares for the year in the total compensation, the cut was of 28 per cent to £4.57 million.) For the report’s full discussion of executive compensation, see from p.68 (70 of 228; form p.61).

With regards to legal proceedings (report p.85 (87 of 228), form p.77), the section with that heading starts with the following statement: “Save as disclosed in the following paragraphs, no member of the group is a party to, and no property of a member of the group is subject to, any pending legal proceedings that are significant to the group.” (WV&Z’s emphasis) Tellingly, the derivative action, filed in the relevant year, is not disclosed.

The notice of the AGM of 12 April in London is here.