Inside M&A - January/February 2012

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In This Issue:

Excerpt from SEC Sues Private Company and its CEO for Fraud Related to Buyback Program Involving Employee Stock Bonus Plan

Overview of the SEC’s Complaint

On December 12, 2011, the U.S. Securities and Exchange Commission (SEC) filed suit in the U.S. District Court for the Southern District of Florida against Stiefel Laboratories, a family-owned dermatological products business that was acquired by GlaxoSmithKline (GSK) in 2009, and against Charles Stiefel, the company’s former chairman and CEO.  The SEC has statutory standing to bring anti-fraud claims under Section 10(b) of the Securities and Exchange Act of 1934 (the Exchange Act).  Prior to the acquisition, Stiefel Laboratories was the world’s largest private manufacturer of dermatology products, with annual revenues of $1 billion and approximately 4,000 employees.  Stiefel and his family owned the majority of company shares.

Excerpt from The Fiducie in Restructuring and Acquisition Transactions in France

For years, the absence in the French civil law system of the concept of the trust hampered French lawyers involved in structuring complex secured financings and other transactions.  Although common law trusts could be used in the context of off-shore transactions involving a French party, the device could not be used in a domestic French operation.  In response, France enacted new legislation in 2007 introducing the concept of the fiducie.

Fiducie is defined as a “transaction by which one or more settlors (constituants) transfer assets, rights or security, either present or future, to one or more fiduciaries (fiduciaires) who, while maintaining those assets segregated from their own estate, act for a specific purpose for the benefit of one or more beneficiaries (bénéficiaires).”  The fiducie creates a dedicated fiduciary estate (patrimoine fiduciaire) which is not subject to the claims of creditors of any party to the fiducie (including the fiduciary).  The transfer of ownership of the fiduciary assets is temporary but the term can be as long as 99 years.

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