Latest Legal News: Shareholders Sue Morgan Stanley Over Exec Pay

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A daily look at legal news and the business of law:

Hey Banks, It's Capitalism 101: Run the Company for Shareholders, Not Employees

Think taxpayers are mad at big banks taking corporate welfare checks, er, bailout money, and spending it on their executives with a glee that would shame President Ronald Reagan's mythical Cadillac-driving welfare queen? Shareholders at Morgan Stanley (MS) are so fed up with with the big payouts in 2006, 2007 and 2009, they're suing to get the money back.How much did the executives enrich themselves and their employees rather than shareholders? Well, according to the complaint, Morgan paid 59% of its 2007 net revenue ($16.6 billion) to employees, and in 2009 bumped that up to 62% of net revenue (14.4 billion). In 2006, Morgan paid a cool $14 billion, though the suit doesn't provide the percentage of 2006 net revenue. Of course, Morgan Stanley isn't the only target of shareholder ire; the same plaintiffs sued Goldman Sachs (GS) in December over its exec bonuses.

Lawsuit Watch: Defective Water Pipes the Next Big Thing?

As if our nation's infrastructure wasn't crumbling enough already, the New York Timesreports that a whistle-blower (joined by four states and 40 California water authorities) alleges that since 1996 JM Eagle has sold plastic piping that it knew was defective. Instead of the advertised 50 years, in some cases the piping has been failing in its first year. Replacing the piping installed around the country is going to be massively expensive. JM Eagle has 60% of the new water pipe market and sells in Canada and Mexico, too. Nevada alone has spent $57 million in recent years on JM Eagle piping. Cash-strapped states will be eager to have JM Eagle or parent company Formosa Plastic Group pick up the tab. If the whistle-blower's evidence is solid, I'd expect the number of plaintiffs joining this suit to grow substantially.

Bribing Foreign Governments No Longer Part of Cost of Doing Business -- Or at Least, Less a Part

In recent years the Department of Justice has stepped up its enforcement of the Foreign Corrupt Practices Act, and Thursday claimed two new convictions: Two Virginia men pleaded guilty to bribing Panamanian officials so that their company could maintain Panamanian lighthouses and buoys for 20 years. In another recent case, the company's in-house counsel played a key role in ending the company's bribery scheme. According to Corporate Counsel, Jay Dalton, the now-retired general counsel of Willbros Group Inc. (WG) discovered and shut down a subsidiary's attempt to bribe Nigerian officials for a pipeline deal, helping to convict two of the subsidiary's executives. One of those officials also admitted to bribing Ecuadorian officials.

The 28th State Tells the 13 Original Colonies To Teach the Constitution as a Christian Document

It's a free market irony that Texas, which talked about seceding from the U.S. as recently as last April, an action that even its Governor incorrectly asserted the state had a special right to undertake, has a profound influence on the nation's textbooks' contents. As detailed in an upcoming New York Times magazine piece, because Texas purchases so many textbooks each year, publishers cater to the demands of Texas State Board of Education. One of the major demands, this time around, is increasing instruction on America's roots as a Christian nation. One board member makes clear this effort is about indoctrinating the youth of America to reshape the governance of America: "The philosophy of the classroom of one generation is the philosophy of the government in the next."
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