Details of new legislation to be introduced by Sen. Jay Rockefeller are leaking. Essentially, the legislation in its current form would give the President the power to declare a "cyber-emergency" and allow him or her to turn off the internet. It would also create a licensing standard for technology professionals to create a single standard. In the bill there is no definition of what is a "cyber-emergency" or any bounds to the President's powers.
This is a road paved with good intentions, and we know where that leads. Giving the President a kill switch and giving the President a blank check to declare a cyber-emergency is ridiculous. Let private industry deal with cyber-threats and attacks; given some motivation I'm sure they'll come up with something before the government does.
Sunday, August 30, 2009
Friday, August 28, 2009
Microsoft's Word Patent Appeal
An appeals court just set the hearing date for Microsoft's appeal of an injunction against them selling new products of Word for September 23, 2009. HP and Dell are filing amicus briefs on Microsoft's behalf, arguing the injunction would hurt business.
Preferred vs. Common
Professor Stephen Brainbridge wrote a terrific blog on In Re: Trados Incorporated Shareholder Litigation, No. 1512-CC (July 24, 2009), analyzing the duties a director owes to preferred shareholders vis a vis common shareholders. The court held that directors owe duties to common shareholders are common law in nature, where preferred shareholders are usually contractual in nature. If common shareholders and preferred shareholders have divergent interests, directors should favor common law shareholders.
Monday, August 3, 2009
Schmidt resigns from Apple board
Google CEO Eric Schmidt resigned from Apple's board of directors citing a conflict of interest. And that has nothing to do with the Federal Trade Commission's investigation of Apple-Google collusion in the marketplace.
Virtual Taxation
Adam Chodorow has published an article detailing a possible solution on tracking basis on virtual assets for tax purposes.
Tuesday, July 28, 2009
Insider Trading
We've had the Second Circuit finally speak in SEC v. Dorozhko regarding the liability of people who owe no fiduciary duty to the source of the information who steals inside information and makes a profit off of it. The Second Circuit held "[T]he Supreme Court has in a number of opinions carefully established that the essential component of a § 10(b) violation is a breach of a fiduciary duty to disclose or abstain that coincides with a securities transaction.”
One of the interesting aspects of the case is the subtle shift from the fiduciary base theory of US v. O'Hagan to a property rights approach. To quote the quoteable Steven Bainbridge in his blog post about the case: "If a law student had written the Dorozhko, I’d give him a D (and only because I never ever fail anybody). It is not an interpretation of O’Hagan. It is the creation of an entirely new version of misappropriation liability., carved out of whole cloth and without any regard for precedent. It may be right on policy, but isn’t that for the Supreme Court to decide."
This theory also goes with the recent dismissal of the complaint against Mark Cuban for insider trading as well.
One of the interesting aspects of the case is the subtle shift from the fiduciary base theory of US v. O'Hagan to a property rights approach. To quote the quoteable Steven Bainbridge in his blog post about the case: "If a law student had written the Dorozhko, I’d give him a D (and only because I never ever fail anybody). It is not an interpretation of O’Hagan. It is the creation of an entirely new version of misappropriation liability., carved out of whole cloth and without any regard for precedent. It may be right on policy, but isn’t that for the Supreme Court to decide."
This theory also goes with the recent dismissal of the complaint against Mark Cuban for insider trading as well.
Wednesday, July 22, 2009
Google not liable for search results
In Great Britain, the UK court has held that Google cannot be "regarded as a publisher" for its search results, giving Google immunity over libel claims in for any defamatory remarks that appear in search results. Justice David Eady said that Google is not a publisher because searches are carried out entirely by computers and the search engine does not choose the terms itself.
Wednesday, July 1, 2009
New FHA Regulations for Condos
Housing and Urband Development issued Mortgagee Letter 2009-19 that provides new guidance for condominium projects eligibility under the Housing and Economic Recovery Act of 2008. They are as follows:
I. Approval Processing Options
A. The lender will have two condominium project approval processing options. The applicable documentation requirements will be the same for each option:
1. HUD Review and Approval Process (HRAP).
2. Direct Endorsement Lender Review and Approval Process (DELRAP). This option is only available to lenders who have unconditional Direct Endorsement authority and staff with knowledge and expertise in reviewing and approving condominium projects.
B. The processing options stated above will be applicable to condominium developments that are:
1. Proposed/Under Construction;
2. Existing Construction; or
3. Conversions.
II. Eligible Projects
The Condominium Project has been created and exists in full compliance with applicable State law requirements of the jurisdiction in which the Condominium Project is located, and with all other applicable laws and regulations.
III. Ineligible Projects
A. Condominium Hotel or “Condotels”
B. Timeshares or segmented ownership projects
C. Houseboat projects
D. Multi-dwelling unit condominiums [i.e. more than one dwelling per condominium unit]
E. All projects not deemed to be used primarily as residential
IV. General Requirements
A. Site Condominiums
Site Condominiums are single family detached dwellings encumbered by a declaration of condominium covenants or condominium form of ownership. Condominium Project approval is not required for Site Condominiums; however, the Condominium Rider (Attachment D) must be included in the FHA case binder submitted for insurance endorsement. Manufactured housing condominium projects (MHCPs) may not be processed as site condominiums; these projects will require approval under HRAP.
NOTE: Site Condominiums requirements are effective immediately with issuance of this Mortgage Letter.
B. “Spot Loan” Approval Process
The Spot Loan Approval process as defined in Mortgage Letter 1996-41 is eliminated with issuance of this guidance. The DELRAP and HRAP processes have been streamlined to allow for uncomplicated condominium project approvals eliminating the need to approve units on a “spot loan” basis.
C. FHA-to-FHA Transactions Project Approval is not required for: a. FHA‑to‑FHA streamline refinance transactions; orb. FHA/HUD Real Estate Owned (REO) Division sales.
D. Environmental Review Requirements If a lender elects to use the HRAP option, then environmental reviews will not berequired for projects that, at the time that condominium project approval is requested,have progressed beyond that stage of construction where HUD has any influence over theremaining uncompleted construction. This occurs when:
· a condominium plat or similar development plan and any phases delineated therein have been reviewed and approved by the local jurisdiction and, if applicable, recorded in the land records, and
· the construction of the project’s infrastructure (streets, stormwater management, water and sewage systems, utilities, facilities (e.g., parking lots, community building, swimming pools, golf course, playground, etc.) and buildings containing the condominium units has proceeded to a point that precludes any major changes.
Environmental reviews will not be required for condominium projects approved using theDELRAP option. If the appraiser identifies an environmental condition or the lender isaware of an existing environmental condition through remarks provided on the Builder’sCertification, form HUD-92541, the appraisal or other known documentation, the lendermust avoid or mitigate the following conditions before completing its review process:
1. The project is located in a Special Flood Hazard Area designated on a Federal Emergency Management Agency flood map.
2. Potential noise issues, where the property is located within 1000 feet of a highway, freeway, or heavily traveled road, within 3000 feet of a railroad, or within one mile of an airport or five miles of a military airfield.
3. The property has an unobstructed view, or is located within 2000 feet, of any facility handling or storing explosive or fire-prone materials.
4. The property is located within 3000 feet of a dump or landfill, or of a site on an EPA Superfund (NPL) list or equivalent state list, or a Phase I Environmental Site Assessment indicates the presence of a Recognized Environmental Condition or recommends further (Phase II) assessment for the presence of contaminants that could affect the site.
5. The property has any hazards or adverse conditions listed in Section 1.f. of the Builder’s Certification, including, but not limited to, high ground water levels, unstable soils, or earth fill.
6. The project is located in a wetland designated on National Wetlands Inventory maps or designated by State or local authorities.
7. The project is on the National Register of Historic Places or is within a historic district listed on the Register.
8. The appraiser or DE lender is aware of any other condition that could adversely affect the health or safety of the residents of the project.
V. Project Eligibility Requirements
A. The following requirements apply to all Condominium Project approvals:
· Projects consist of two units or more.
· Projects must be covered by hazard and liability insurance and, when applicable, flood insurance.
· Right of first refusal is permitted unless it violates discriminatory conduct under the Fair Housing Act regulation in 24 CFR 100.
· No more than 25 percent of the property’s total floor area in a project can be used for commercial purposes. The commercial portion of the project must be of a nature that is homogenous with residential use, which is free of adverse conditions to the occupants of the individual condominium units.
· No more than 10 percent of the units may be owned by one investor. This will apply to developers/builders that subsequently rent vacant and unsold units. For two and three unit condominium projects, no single entity may own more than one unit within the project; all units, common elements, and facilities within the project must be 100 percent complete; and only one unit can be conveyed to non-owner occupants.
· No more than 15 percent of the total units can be in arrears (more than 30 days past due) of their condominium association fee payment.
· At least 50 percent of the total units must be sold prior to endorsement of any mortgage on a unit. Valid presales include an executed sales agreement and evidence that a lender is willing to make the loan.
[1] · At least 50 percent of the units of a project must be owner-occupied or sold to owners who intend to occupy the units.
[2] For proposed, under construction or projects still in their initial marketing phase, FHA will allow a minimum owner occupancy amount equal to 50 percent of the number of presold units (the minimum presales requirement of 50 percent still applies).
· Legal Phasing is permitted for condominium processing. It is recommended that developers submit all known phases for initial project approval. For purposes of calculating the owner-occupancy percentage:
a. On multi-phased projects the owner-occupancy percentage is calculated on the first declared phase and cumulatively on subsequent phases if the ownership of the condominium project remains the same;
b. If multi-phasing includes separate ownership per phase, each phase is calculated individually; orc. Single-phase condominium project approval requests must meet the owner-occupancy percentage requirement.
· FHA Concentration
a. Projects consisting of three or less units will have no more than one unit encumbered with FHA insurance.
b. Projects consisting of four or more units will have no more than 30 percent of the total units encumbered with FHA insurance.
· Reserve Study - a current reserve study must be performed to assure that adequate funds are available for the funding of capital expenditures and maintenance. A current reserve study must be no more than 12 months old – if recent events or market conditions have affected the finished condition of the property that information must be included. When reviewing the reserve study, consideration must be given to items that have been replaced after the time that the reserve study was completed.
VI. Manufactured Housing Condominium Projects
Pursuant to HERA, manufactured housing condominium projects are now eligible for FHA mortgage insurance. Accordingly, all outstanding and current FHA Manufactured Housing individual unit requirements remain applicable for both Home Equity Conversion Mortgages (HECM) and forward mortgages, including elevations in flood zones and foundation requirements. MHCPs must be submitted to the applicable Homeownership Center for review and approval – these projects are ineligible for DELRAP processing. MHCPs may not be processed as site condominiums; these projects will require approval under HRAP.
1. Appraisal reporting requirements for condominium manufactured homes:
a. Appraisal must be reported on the Manufactured Home Appraisal Report (Fannie Mae Form 1004C).
b. Subject condominium project must be inspected and the Project Information section of the Individual Condominium Unit Appraisal Report (Fannie Mae Form 1073) must be completed and included as an addendum to the appraisal report.
c. Comparable sales must be condominium manufactured homes. Detailed explanations must be provided when search parameters are expanded due to the lack of comparable sales in subject market area.
VII. Condominium Conversions
Conversion to condominiums occurs in those projects which involve changing the title of an existing structure generally under one title, to property that is separated into units so that the title to most units can be held separately. Changes to condominium conversion requirements are defined below:
1. The one-year waiting period requirement for conversions is eliminated;
2. In the event that FHA is insuring a mortgage on a unit and an undivided interest in the common elements on a project undergoing remodeling or rehabilitation, the entire condominium project, including the common facilities, must be 100 percent completely built before any mortgage may be endorsed. Escrow provisions will be permitted for weather related delays for common areas only.
VIII. FHA Connection (FHAC)
System modifications will be made to capture additional information, remove obsolete fields, and identify points of contacts. Major planned system modifications are: 1
. Establishment of a Condominium Project Approval screen in FHAC that will be used by DE lenders and HUD staff to enter approval, rejection and recertification data.
2. System generated condominium project identification numbers based on the HOC of jurisdiction. NOTE: While major system modifications have been identified, other modifications will be made and released as necessary to ensure collection of all valid information. I
X. Condominium New Construction Pre-approval and Inspection Requirements Mortgagee Letter 2001-27 prohibited condominium processing under those guidelines. This Mortgagee Letter now permits condominium processing under the policy as established below. In cases where a building permit and a certificate of occupancy (or its equivalent) are issued by a local jurisdiction that performs a minimum of three inspections (typically the footing, framing and final) neither an Early Start Letter nor a HUD approved ten-year warranty plan is required. For those jurisdictions that do not issue a building permit (or its equivalent) prior to construction and a Certificate of Occupancy (or its equivalent) upon completion of construction, a condominium unit that is one year old or less must have either an Early Start Letter (with a minimum of three inspections by an FHA Roster Inspector) or be covered by a HUD-approved ten-year warranty plan (with a final inspection by a FHA Roster Inspector) to be eligible for high-ratio mortgage insurance. All condominium types are eligible to follow this process (e.g. Multi-family). Projects are still required to be on the FHA-approved condominium list. FHA will require the completion and retention of the following documents when processing new construction condominium project approvals:
· Builder’s Certification of Plans, Specifications and Site, form HUD-92541
· Builder’s Warranty, form HUD-92544
· Building Permit (or its equivalent)
· Final Certificate of Occupancy (or its equivalent)
FHA will not accept a temporary Certificate of Occupancy; all units within the building(where the specific unit that is security for the insured financing is located) must be complete.
X. General Processing Steps for DELRAP or HRAP
A. Determine acceptability of the site and location of the project.
B. Review the project’s financial and legal documents; if acceptable, authorized personnel will sign and date the Lender Certification of Condominium Requirements
C. Place the Lender Certification of Condominium Requirements and other required certifications in the FHA case binder.
D. Retain and maintain all documents used to review and approve the project for a period of three years from the date of project approval.
E. Mixed condominium review and processing is not permitted. If a lender opts to participate in the DELRAP process, all future processing submissions must be processed, accordingly, in that sole and particular manner with the exception of manufactured housing condominium project approvals (these must be submitted to the applicable Homeownership Center for review and approval).
F. If a project is listed as Rejected or Withdrawn on the FHA-approved condominiums list, the only approval process accepted is HRAP.
G. Second and subsequent lenders that submit a unit for insurance in a project that is listed on the FHA-approved condominium list are not required to complete any further approval process. At the lender’s discretion, they may seek any additional information to satisfy their own requirements and/or perform their own due diligence. FHA will require the lender to certify it has no knowledge of circumstances or conditions that might have an adverse effect on the project or cause a mortgage secured by a unit in the project to become delinquent.
H. Subsequent phases being approved by a different lender must follow the general procedures listed here in Section X. The original lender must also follow these general procedures but will have already satisfied some of the steps listed.
I. All required certifications, as applicable, must be included in the FHA case binder submitted for insurance endorsement.
J. For both new construction and conversions if the developer intends to market five or more units within the next 12 months with FHA mortgage insurance, an Affirmative Fair Housing Marketing Plan (AFHMP) or a Voluntary Affirmative Marketing Agreement (VAMA) must be in place. Form HUD-935.2C, Affirmative Fair Housing Marketing Plan – Condominium or Cooperatives, is to be used for condominium projects. This completed form must be submitted to the Director of the Processing and Underwriting Division in the jurisdictional HOC for approval. If “a, b, c, or d” is checked on response to Question 2 in the Applicability section, the developer is not required to complete an AFHMP. The developer should complete block 11 on form HUD-92541, Builder’s Certification of Plans, Specification and Site.
K. Environmental reviews will be required for proposed and under construction project approvals submitted under the HRAP option consistent with the Environmental Review Requirements listed in Section IV. D. Environmental review is not required under DELRAP, but the lender must take necessary actions to avoid or mitigate identified environmental conditions prior to completing its project review.
L. Transfer of control of the Homeowners Association shall pass to the owners of units within the project no later than the earlier of the following:
1. 120 days after the date by which 75 percent of the units have been conveyed to the unit purchasers, or
2. One year after completion of the project evidence by the first conveyance to a unit purchaser.
XI. Certification for Initial Approval
Lenders must provide certifications on company letterhead signed by a company authorized representative (signature stamps or electronic signatures are not authorized) that:
1. The eligible condominium project complies with applicable FHA requirements addressed within this Mortgagee Letter;
2. All condominium legal documents meet HUD regulations, state and local condominium laws; and3. Pre-sale and owner occupancy ratios per loan are met. NOTE: FHA will not require an attorney's certification; however, lenders may obtain this as part of their due diligence process. Lenders are reminded that this document will not replace other condominium certifications required from the lender.
XII. Certification of Projects Previously Approved
If a project has been previously approved, lenders must certify that they are not aware of any change in circumstances since initial approval of the project that would result in the project no longer complying with FHA requirements.
XIII. Recertification of Project Approvals
Condominium Project approvals will expire two years from the date it has been placed onthe list of approved condominiums. This will also apply to all projects currently on the list of approved condominiums. Further participation in the program after this two-year period has expired will require recertification to determine that the project is still in compliance with HUD’s owner-occupancy requirement and that no conditions currently exist which would present an unacceptable risk to FHA. Items that should be given consideration are:
1. Pending special assessments,
2. Pending legal action against the condominium association, or its officers or directors,
3. Hazard, liability insurance and when applicable flood insurance.
XIV. Quality Assurance
Monitoring the condominium approval process is critical to the success of the program. Lenders who approve condominium projects utilizing the DELRAP option will be required to submit a copy of the complete condominium project approval package to the applicable Homeownership Center within five business days of approval. Lenders are required to submit the first five DELRAP approvals for review. Further, to manage FHA’s risk, and ensure compliance with all condominium project policy requirements, additional condominium project approvals will be selected for review. The criteria for selection of the additional approvals will be determined and lenders will be notified in future guidance.
XV. False Certifications
Title 18 U.S.C. 1014, provides in part that whoever knowingly and willfully makes or uses a document containing any false, fictitious, or fraudulent statement or entry, in any matter in the jurisdiction of any department or agency of the United States, shall be fined not more than $1,000,000 or imprisoned for not more than 30 years or both. In addition, violation of this or others may result in debarment and civil liability for damages suffered by the Department.
XVI. Insurance of Individual Units
All applicable, outstanding and any additional FHA insurance requirements not defined in this guidance must be met for individual units.
[1] Secondary residences can only be included if it meets the requirements of 24 CFR 203.18(f)(2).
[2] If the owner-occupancy ratio includes presales, FHA requires an executed sales agreement and corresponding evidence that a lender is willing to make the loan and the buyer intends to occupy the unit. A separate owner-occupancy certification is also required in the FHA case binder for loans where the Individual Condominium Unit Appraisal Report, Fannie Mae Form 1073, does not contain the required data or the condominium project is proposed or under construction.
I. Approval Processing Options
A. The lender will have two condominium project approval processing options. The applicable documentation requirements will be the same for each option:
1. HUD Review and Approval Process (HRAP).
2. Direct Endorsement Lender Review and Approval Process (DELRAP). This option is only available to lenders who have unconditional Direct Endorsement authority and staff with knowledge and expertise in reviewing and approving condominium projects.
B. The processing options stated above will be applicable to condominium developments that are:
1. Proposed/Under Construction;
2. Existing Construction; or
3. Conversions.
II. Eligible Projects
The Condominium Project has been created and exists in full compliance with applicable State law requirements of the jurisdiction in which the Condominium Project is located, and with all other applicable laws and regulations.
III. Ineligible Projects
A. Condominium Hotel or “Condotels”
B. Timeshares or segmented ownership projects
C. Houseboat projects
D. Multi-dwelling unit condominiums [i.e. more than one dwelling per condominium unit]
E. All projects not deemed to be used primarily as residential
IV. General Requirements
A. Site Condominiums
Site Condominiums are single family detached dwellings encumbered by a declaration of condominium covenants or condominium form of ownership. Condominium Project approval is not required for Site Condominiums; however, the Condominium Rider (Attachment D) must be included in the FHA case binder submitted for insurance endorsement. Manufactured housing condominium projects (MHCPs) may not be processed as site condominiums; these projects will require approval under HRAP.
NOTE: Site Condominiums requirements are effective immediately with issuance of this Mortgage Letter.
B. “Spot Loan” Approval Process
The Spot Loan Approval process as defined in Mortgage Letter 1996-41 is eliminated with issuance of this guidance. The DELRAP and HRAP processes have been streamlined to allow for uncomplicated condominium project approvals eliminating the need to approve units on a “spot loan” basis.
C. FHA-to-FHA Transactions Project Approval is not required for: a. FHA‑to‑FHA streamline refinance transactions; orb. FHA/HUD Real Estate Owned (REO) Division sales.
D. Environmental Review Requirements If a lender elects to use the HRAP option, then environmental reviews will not berequired for projects that, at the time that condominium project approval is requested,have progressed beyond that stage of construction where HUD has any influence over theremaining uncompleted construction. This occurs when:
· a condominium plat or similar development plan and any phases delineated therein have been reviewed and approved by the local jurisdiction and, if applicable, recorded in the land records, and
· the construction of the project’s infrastructure (streets, stormwater management, water and sewage systems, utilities, facilities (e.g., parking lots, community building, swimming pools, golf course, playground, etc.) and buildings containing the condominium units has proceeded to a point that precludes any major changes.
Environmental reviews will not be required for condominium projects approved using theDELRAP option. If the appraiser identifies an environmental condition or the lender isaware of an existing environmental condition through remarks provided on the Builder’sCertification, form HUD-92541, the appraisal or other known documentation, the lendermust avoid or mitigate the following conditions before completing its review process:
1. The project is located in a Special Flood Hazard Area designated on a Federal Emergency Management Agency flood map.
2. Potential noise issues, where the property is located within 1000 feet of a highway, freeway, or heavily traveled road, within 3000 feet of a railroad, or within one mile of an airport or five miles of a military airfield.
3. The property has an unobstructed view, or is located within 2000 feet, of any facility handling or storing explosive or fire-prone materials.
4. The property is located within 3000 feet of a dump or landfill, or of a site on an EPA Superfund (NPL) list or equivalent state list, or a Phase I Environmental Site Assessment indicates the presence of a Recognized Environmental Condition or recommends further (Phase II) assessment for the presence of contaminants that could affect the site.
5. The property has any hazards or adverse conditions listed in Section 1.f. of the Builder’s Certification, including, but not limited to, high ground water levels, unstable soils, or earth fill.
6. The project is located in a wetland designated on National Wetlands Inventory maps or designated by State or local authorities.
7. The project is on the National Register of Historic Places or is within a historic district listed on the Register.
8. The appraiser or DE lender is aware of any other condition that could adversely affect the health or safety of the residents of the project.
V. Project Eligibility Requirements
A. The following requirements apply to all Condominium Project approvals:
· Projects consist of two units or more.
· Projects must be covered by hazard and liability insurance and, when applicable, flood insurance.
· Right of first refusal is permitted unless it violates discriminatory conduct under the Fair Housing Act regulation in 24 CFR 100.
· No more than 25 percent of the property’s total floor area in a project can be used for commercial purposes. The commercial portion of the project must be of a nature that is homogenous with residential use, which is free of adverse conditions to the occupants of the individual condominium units.
· No more than 10 percent of the units may be owned by one investor. This will apply to developers/builders that subsequently rent vacant and unsold units. For two and three unit condominium projects, no single entity may own more than one unit within the project; all units, common elements, and facilities within the project must be 100 percent complete; and only one unit can be conveyed to non-owner occupants.
· No more than 15 percent of the total units can be in arrears (more than 30 days past due) of their condominium association fee payment.
· At least 50 percent of the total units must be sold prior to endorsement of any mortgage on a unit. Valid presales include an executed sales agreement and evidence that a lender is willing to make the loan.
[1] · At least 50 percent of the units of a project must be owner-occupied or sold to owners who intend to occupy the units.
[2] For proposed, under construction or projects still in their initial marketing phase, FHA will allow a minimum owner occupancy amount equal to 50 percent of the number of presold units (the minimum presales requirement of 50 percent still applies).
· Legal Phasing is permitted for condominium processing. It is recommended that developers submit all known phases for initial project approval. For purposes of calculating the owner-occupancy percentage:
a. On multi-phased projects the owner-occupancy percentage is calculated on the first declared phase and cumulatively on subsequent phases if the ownership of the condominium project remains the same;
b. If multi-phasing includes separate ownership per phase, each phase is calculated individually; orc. Single-phase condominium project approval requests must meet the owner-occupancy percentage requirement.
· FHA Concentration
a. Projects consisting of three or less units will have no more than one unit encumbered with FHA insurance.
b. Projects consisting of four or more units will have no more than 30 percent of the total units encumbered with FHA insurance.
· Reserve Study - a current reserve study must be performed to assure that adequate funds are available for the funding of capital expenditures and maintenance. A current reserve study must be no more than 12 months old – if recent events or market conditions have affected the finished condition of the property that information must be included. When reviewing the reserve study, consideration must be given to items that have been replaced after the time that the reserve study was completed.
VI. Manufactured Housing Condominium Projects
Pursuant to HERA, manufactured housing condominium projects are now eligible for FHA mortgage insurance. Accordingly, all outstanding and current FHA Manufactured Housing individual unit requirements remain applicable for both Home Equity Conversion Mortgages (HECM) and forward mortgages, including elevations in flood zones and foundation requirements. MHCPs must be submitted to the applicable Homeownership Center for review and approval – these projects are ineligible for DELRAP processing. MHCPs may not be processed as site condominiums; these projects will require approval under HRAP.
1. Appraisal reporting requirements for condominium manufactured homes:
a. Appraisal must be reported on the Manufactured Home Appraisal Report (Fannie Mae Form 1004C).
b. Subject condominium project must be inspected and the Project Information section of the Individual Condominium Unit Appraisal Report (Fannie Mae Form 1073) must be completed and included as an addendum to the appraisal report.
c. Comparable sales must be condominium manufactured homes. Detailed explanations must be provided when search parameters are expanded due to the lack of comparable sales in subject market area.
VII. Condominium Conversions
Conversion to condominiums occurs in those projects which involve changing the title of an existing structure generally under one title, to property that is separated into units so that the title to most units can be held separately. Changes to condominium conversion requirements are defined below:
1. The one-year waiting period requirement for conversions is eliminated;
2. In the event that FHA is insuring a mortgage on a unit and an undivided interest in the common elements on a project undergoing remodeling or rehabilitation, the entire condominium project, including the common facilities, must be 100 percent completely built before any mortgage may be endorsed. Escrow provisions will be permitted for weather related delays for common areas only.
VIII. FHA Connection (FHAC)
System modifications will be made to capture additional information, remove obsolete fields, and identify points of contacts. Major planned system modifications are: 1
. Establishment of a Condominium Project Approval screen in FHAC that will be used by DE lenders and HUD staff to enter approval, rejection and recertification data.
2. System generated condominium project identification numbers based on the HOC of jurisdiction. NOTE: While major system modifications have been identified, other modifications will be made and released as necessary to ensure collection of all valid information. I
X. Condominium New Construction Pre-approval and Inspection Requirements Mortgagee Letter 2001-27 prohibited condominium processing under those guidelines. This Mortgagee Letter now permits condominium processing under the policy as established below. In cases where a building permit and a certificate of occupancy (or its equivalent) are issued by a local jurisdiction that performs a minimum of three inspections (typically the footing, framing and final) neither an Early Start Letter nor a HUD approved ten-year warranty plan is required. For those jurisdictions that do not issue a building permit (or its equivalent) prior to construction and a Certificate of Occupancy (or its equivalent) upon completion of construction, a condominium unit that is one year old or less must have either an Early Start Letter (with a minimum of three inspections by an FHA Roster Inspector) or be covered by a HUD-approved ten-year warranty plan (with a final inspection by a FHA Roster Inspector) to be eligible for high-ratio mortgage insurance. All condominium types are eligible to follow this process (e.g. Multi-family). Projects are still required to be on the FHA-approved condominium list. FHA will require the completion and retention of the following documents when processing new construction condominium project approvals:
· Builder’s Certification of Plans, Specifications and Site, form HUD-92541
· Builder’s Warranty, form HUD-92544
· Building Permit (or its equivalent)
· Final Certificate of Occupancy (or its equivalent)
FHA will not accept a temporary Certificate of Occupancy; all units within the building(where the specific unit that is security for the insured financing is located) must be complete.
X. General Processing Steps for DELRAP or HRAP
A. Determine acceptability of the site and location of the project.
B. Review the project’s financial and legal documents; if acceptable, authorized personnel will sign and date the Lender Certification of Condominium Requirements
C. Place the Lender Certification of Condominium Requirements and other required certifications in the FHA case binder.
D. Retain and maintain all documents used to review and approve the project for a period of three years from the date of project approval.
E. Mixed condominium review and processing is not permitted. If a lender opts to participate in the DELRAP process, all future processing submissions must be processed, accordingly, in that sole and particular manner with the exception of manufactured housing condominium project approvals (these must be submitted to the applicable Homeownership Center for review and approval).
F. If a project is listed as Rejected or Withdrawn on the FHA-approved condominiums list, the only approval process accepted is HRAP.
G. Second and subsequent lenders that submit a unit for insurance in a project that is listed on the FHA-approved condominium list are not required to complete any further approval process. At the lender’s discretion, they may seek any additional information to satisfy their own requirements and/or perform their own due diligence. FHA will require the lender to certify it has no knowledge of circumstances or conditions that might have an adverse effect on the project or cause a mortgage secured by a unit in the project to become delinquent.
H. Subsequent phases being approved by a different lender must follow the general procedures listed here in Section X. The original lender must also follow these general procedures but will have already satisfied some of the steps listed.
I. All required certifications, as applicable, must be included in the FHA case binder submitted for insurance endorsement.
J. For both new construction and conversions if the developer intends to market five or more units within the next 12 months with FHA mortgage insurance, an Affirmative Fair Housing Marketing Plan (AFHMP) or a Voluntary Affirmative Marketing Agreement (VAMA) must be in place. Form HUD-935.2C, Affirmative Fair Housing Marketing Plan – Condominium or Cooperatives, is to be used for condominium projects. This completed form must be submitted to the Director of the Processing and Underwriting Division in the jurisdictional HOC for approval. If “a, b, c, or d” is checked on response to Question 2 in the Applicability section, the developer is not required to complete an AFHMP. The developer should complete block 11 on form HUD-92541, Builder’s Certification of Plans, Specification and Site.
K. Environmental reviews will be required for proposed and under construction project approvals submitted under the HRAP option consistent with the Environmental Review Requirements listed in Section IV. D. Environmental review is not required under DELRAP, but the lender must take necessary actions to avoid or mitigate identified environmental conditions prior to completing its project review.
L. Transfer of control of the Homeowners Association shall pass to the owners of units within the project no later than the earlier of the following:
1. 120 days after the date by which 75 percent of the units have been conveyed to the unit purchasers, or
2. One year after completion of the project evidence by the first conveyance to a unit purchaser.
XI. Certification for Initial Approval
Lenders must provide certifications on company letterhead signed by a company authorized representative (signature stamps or electronic signatures are not authorized) that:
1. The eligible condominium project complies with applicable FHA requirements addressed within this Mortgagee Letter;
2. All condominium legal documents meet HUD regulations, state and local condominium laws; and3. Pre-sale and owner occupancy ratios per loan are met. NOTE: FHA will not require an attorney's certification; however, lenders may obtain this as part of their due diligence process. Lenders are reminded that this document will not replace other condominium certifications required from the lender.
XII. Certification of Projects Previously Approved
If a project has been previously approved, lenders must certify that they are not aware of any change in circumstances since initial approval of the project that would result in the project no longer complying with FHA requirements.
XIII. Recertification of Project Approvals
Condominium Project approvals will expire two years from the date it has been placed onthe list of approved condominiums. This will also apply to all projects currently on the list of approved condominiums. Further participation in the program after this two-year period has expired will require recertification to determine that the project is still in compliance with HUD’s owner-occupancy requirement and that no conditions currently exist which would present an unacceptable risk to FHA. Items that should be given consideration are:
1. Pending special assessments,
2. Pending legal action against the condominium association, or its officers or directors,
3. Hazard, liability insurance and when applicable flood insurance.
XIV. Quality Assurance
Monitoring the condominium approval process is critical to the success of the program. Lenders who approve condominium projects utilizing the DELRAP option will be required to submit a copy of the complete condominium project approval package to the applicable Homeownership Center within five business days of approval. Lenders are required to submit the first five DELRAP approvals for review. Further, to manage FHA’s risk, and ensure compliance with all condominium project policy requirements, additional condominium project approvals will be selected for review. The criteria for selection of the additional approvals will be determined and lenders will be notified in future guidance.
XV. False Certifications
Title 18 U.S.C. 1014, provides in part that whoever knowingly and willfully makes or uses a document containing any false, fictitious, or fraudulent statement or entry, in any matter in the jurisdiction of any department or agency of the United States, shall be fined not more than $1,000,000 or imprisoned for not more than 30 years or both. In addition, violation of this or others may result in debarment and civil liability for damages suffered by the Department.
XVI. Insurance of Individual Units
All applicable, outstanding and any additional FHA insurance requirements not defined in this guidance must be met for individual units.
[1] Secondary residences can only be included if it meets the requirements of 24 CFR 203.18(f)(2).
[2] If the owner-occupancy ratio includes presales, FHA requires an executed sales agreement and corresponding evidence that a lender is willing to make the loan and the buyer intends to occupy the unit. A separate owner-occupancy certification is also required in the FHA case binder for loans where the Individual Condominium Unit Appraisal Report, Fannie Mae Form 1073, does not contain the required data or the condominium project is proposed or under construction.
Dutch Treat
The Dutch Supreme Court recently held that if a director of a company commits a tort towards a company's creidtor, and is therefore personally liable towards that creditor, if the director enters into an obligation on behalf of the company while he knew or reasonably should have known that the company would not - or not within a reasonable period - be able to fulfill its obligation and would not offer recourse for the damage suffered by the creditor as a result of the malperformance, unless the director is able to show that he personally did not make a sufficiently serious mistake in this respect. www.thedefiningtension.com I just wanted to remind everyone that American law is very different in that in the United States directors do not act as agents of a corporation.
More on Shareholder Access
The ABA just proposed amendments to the Model Business Corporation Act that seem to do a better job with respect to shareholder access to proxy nominations. They will be published shortly in the August edition of the Business Lawyer. Essentially, the amendments will provide for companies to provide their own procedures to allow shareholder access.
Monday, June 29, 2009
No More Commercials
The Supreme Court denied cert on an appeal by the entertainment industry to block Cablevision Systems Corp new DVR that saves the shows at the cable location, not the user location, making the DVR service more like download on demand than a DVR. Licensing rates for broadcast is different than download on demand. The entertainment industry claimed it violated their copyrights, but the Second Circuit differed.
Florida 2008-9 Legislative Update
The Sun-Senitnel has an article giving an update regarding laws to go in effect July 1, 2009.
Cigarette tax
Florida's cigarette tax increases by $1 per pack, to $1.34. The tax on other tobacco products, including pipe and smokeless tobacco, also goes up by a similar rate. Cigars are exempt from the increase. With the hike, Florida's cigarette tax -- previously unchanged since 1990 and among the lowest in the nation -- is now slightly higher than average. The extra $1 tax is expected to generate more than $900 million in income, used to fund cancer research and defray Medicaid costs.
Pill mills
Despite privacy concerns, anyone who buys addictive prescription drugs at pain clinics will be reported to a state database designed to crack down on clinics and doctors that distribute painkillers. Florida becomes the 39th state to create such a pain-pill database, but it could take a while to gear up. The state has to raise millions from private sources to operate the database and the Department of Health has until October 2010 to instruct pain clinics and their doctors on how to report their sales.
Seat belts
Drivers in Florida can now be pulled over for not wearing their seat belts -- and get slapped with tickets that could run more than $100 depending on the county. Until now, drivers could only be cited for not wearing their seat belts if they were pulled over for something else, such as speeding. The state fine for seat-belt violations is $35, but counties can tack on additional fees and court costs.
Insurance
Customers with state-run Citizens Property Insurance Co. will see their premiums rise, for the first time in two years. Most of Citizens' 1 million policyholders, the majority of whom live in South Florida, will see rates rise 10 percent a year for at least five years, beginning Jan. 1. Private insurers also are likely to raise premiums in 2010, although they'll still have to get permission from the state Office of Insurance Regulation. A change to state law provides a quicker process for private insurers to boost premiums up to 10 percent a year.
Property tax appeals
Florida property owners will now have an easier time winning an appeal if they think a county appraiser valued their homes too high. The burden is now on county appraisers to justify their values. In prior years, homeowners had to clear a high legal hurdle to prove the government appraisal was wrong. With the change, more homeowners should be able to win reductions on their tax bills through quasi-judicial Value Adjustment Boards, state analysts predict.
KidCare
Parents who lose their jobs -- or can no longer afford health care premiums -- will now have an easier time enrolling their children in KidCare, a federal-state subsidized health care program for children under 18. The waiting period to switch from private insurance to KidCare has been reduced to two months, from six months. And parents who fall behind on the $15 or $20 monthly co-pay for KidCare will have to wait only 30 days to re-enroll, instead of 60 days. The state also cut down administrative barriers to KidCare enrollment. For example, income eligibility now is verified electronically rather than in person. A family of four making $44,000 or less is eligible for KidCare, which currently insures about 1.5 million Florida children.
Bright Futures
Changes to popular but expensive Bright Futures scholarships will make the program less lucrative for college students. Now, Bright Futures students will receive a flat scholarship award, from $95 to $126 per credit hour, rather than the traditional scholarship that covered up to 100 percent of tuition costs. The flat rate will not cover this year's 8 to 15 percent tuition hikes at state universities, meaning students will pay potentially thousands more out of pocket for each year in school.
Prepaid college
Parents who save for their children's education through so-called 529 prepaid plans will now have additional flexibility to transfer the money to private and out-of-state colleges and career centers. Until now, parents could only get the full benefit from 529 savings plans if their children enrolled in Florida public universities and community colleges.
Phone rates
Florida's home phone service is now deregulated, with the Public Service Commission no longer having authority to set rates and service standards. Under the new system, phone companies such as AT&T will be allowed to raise rates with no state oversight on most home phone packages, by up to 10 percent a year. Telecommunications executives, though, point out that competition is driving prices down rather than up. In addition, phone companies will be able to post their rate schedules online rather than with the PSC. The changes also expand the state's Lifeline program, which provides subsidized basic phone service to the poor. A single person making less than $16,245 will now qualify for free or reduced-cost phone service.
First-responder fees
Cities and counties are now banned from charging a so-called "crash tax," a concept once considered by Davie and other municipalities. Local governments are now prohibited from charging a first-responder fee for a police officer to respond to the scene of an accident or for ambulance rides.
Cigarette tax
Florida's cigarette tax increases by $1 per pack, to $1.34. The tax on other tobacco products, including pipe and smokeless tobacco, also goes up by a similar rate. Cigars are exempt from the increase. With the hike, Florida's cigarette tax -- previously unchanged since 1990 and among the lowest in the nation -- is now slightly higher than average. The extra $1 tax is expected to generate more than $900 million in income, used to fund cancer research and defray Medicaid costs.
Pill mills
Despite privacy concerns, anyone who buys addictive prescription drugs at pain clinics will be reported to a state database designed to crack down on clinics and doctors that distribute painkillers. Florida becomes the 39th state to create such a pain-pill database, but it could take a while to gear up. The state has to raise millions from private sources to operate the database and the Department of Health has until October 2010 to instruct pain clinics and their doctors on how to report their sales.
Seat belts
Drivers in Florida can now be pulled over for not wearing their seat belts -- and get slapped with tickets that could run more than $100 depending on the county. Until now, drivers could only be cited for not wearing their seat belts if they were pulled over for something else, such as speeding. The state fine for seat-belt violations is $35, but counties can tack on additional fees and court costs.
Insurance
Customers with state-run Citizens Property Insurance Co. will see their premiums rise, for the first time in two years. Most of Citizens' 1 million policyholders, the majority of whom live in South Florida, will see rates rise 10 percent a year for at least five years, beginning Jan. 1. Private insurers also are likely to raise premiums in 2010, although they'll still have to get permission from the state Office of Insurance Regulation. A change to state law provides a quicker process for private insurers to boost premiums up to 10 percent a year.
Property tax appeals
Florida property owners will now have an easier time winning an appeal if they think a county appraiser valued their homes too high. The burden is now on county appraisers to justify their values. In prior years, homeowners had to clear a high legal hurdle to prove the government appraisal was wrong. With the change, more homeowners should be able to win reductions on their tax bills through quasi-judicial Value Adjustment Boards, state analysts predict.
KidCare
Parents who lose their jobs -- or can no longer afford health care premiums -- will now have an easier time enrolling their children in KidCare, a federal-state subsidized health care program for children under 18. The waiting period to switch from private insurance to KidCare has been reduced to two months, from six months. And parents who fall behind on the $15 or $20 monthly co-pay for KidCare will have to wait only 30 days to re-enroll, instead of 60 days. The state also cut down administrative barriers to KidCare enrollment. For example, income eligibility now is verified electronically rather than in person. A family of four making $44,000 or less is eligible for KidCare, which currently insures about 1.5 million Florida children.
Bright Futures
Changes to popular but expensive Bright Futures scholarships will make the program less lucrative for college students. Now, Bright Futures students will receive a flat scholarship award, from $95 to $126 per credit hour, rather than the traditional scholarship that covered up to 100 percent of tuition costs. The flat rate will not cover this year's 8 to 15 percent tuition hikes at state universities, meaning students will pay potentially thousands more out of pocket for each year in school.
Prepaid college
Parents who save for their children's education through so-called 529 prepaid plans will now have additional flexibility to transfer the money to private and out-of-state colleges and career centers. Until now, parents could only get the full benefit from 529 savings plans if their children enrolled in Florida public universities and community colleges.
Phone rates
Florida's home phone service is now deregulated, with the Public Service Commission no longer having authority to set rates and service standards. Under the new system, phone companies such as AT&T will be allowed to raise rates with no state oversight on most home phone packages, by up to 10 percent a year. Telecommunications executives, though, point out that competition is driving prices down rather than up. In addition, phone companies will be able to post their rate schedules online rather than with the PSC. The changes also expand the state's Lifeline program, which provides subsidized basic phone service to the poor. A single person making less than $16,245 will now qualify for free or reduced-cost phone service.
First-responder fees
Cities and counties are now banned from charging a so-called "crash tax," a concept once considered by Davie and other municipalities. Local governments are now prohibited from charging a first-responder fee for a police officer to respond to the scene of an accident or for ambulance rides.
Friday, June 19, 2009
Dowload Case
A Minneapolis jury awarded the RIAA $1.92 million against Jammie Thomas-Rasset for illegal file sharing.
Right to Privacy?
Applicants for jobs in the city of Bozeman are being asked for passwords to their social networking sites. It is suposedly designed to verify personal information. But I find it had to believe that there's anything on somebody's facebook or myspace page that could not be verified by other means. The city attorney is looking into alternatives, such as requiring the job applicant to friend the city.
Thursday, June 18, 2009
Las Vegas Paper to Produce Online Records
The Las Vegas Review-Journal will comply with a Federal Grand Jury subpoena compelling the identities of two people who posted comments on the newspaper's website about a criminal tax trial that could be construed as threatening to the jurors and/or judge. The paper said there isn't much to produce given that most of their postings are anonymous.
Tuesday, June 16, 2009
SEC Rule Proposal
Below is a letter sent to the SEC with regards to their newest rule proposal allowing shareholders to nominate directors on the company's proxy statement:
Ms. Elizabeth M. Murphy
Secretary
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549-1090
Security and Exchange Commission
Re: File Number S7-10-09
To Whom It May Concern:
I would like to take this opportunity to comment on the Security and Exchange Commission’s proposed rules regarding shareholder nominations for the Board of Directors. Although I am an attorney this letter is being sent on my own individual behalf and neither on behalf of my firm, nor any particular client.
The SEC’s proposed rule would allow shareholders to nominate directors and require the company to include such nominations on its proxy statements. Although noble in its efforts to the proposal is troubling in several aspects.
First, the boards of directors of corporations in the United States of America have essentially two functions, namely, as an advisor to the executive management of the corporation and as a monitor on behalf of the shareholders. These duties may be in tension at times or namely when the board feels that the executive management of a corporation is not performing on behalf of shareholders, and on the flip side, whereas management has a vested interest in the long term success of the corporation, shareholders do not. The SEC’s proposed rule would favor a huge swing in Board responsibility toward a monitoring activity of a board rather than serving as advise and counsel to management. Such a swing could exacerbate adverse and confrontational roles between Boards and management, where the board of directors becomes more interested in the short terms goals of the shareholders than long term goals of management. This is especially true in that the proposed rules allow shareholders with as little as one percent, (including shareholders aggregating their shares to reach the one percent threshold who are more likely to be pro-holder activists and special interest holders).
Second, the SEC’s role may be overlapping with existing state laws. By way of example, Delaware General Corporate Law, Section 112, provides certain procedures for shareholders to include in the corporation solicitation of proxies their own nominees and slate for directors. Historically, the federal government has left states to determine the internal affairs of the corporation recognizing that the internal affairs of the corporation regulation allow states to compete for various state businesses. The SEC’s entry into the internal governance market may put some states that compete with Delaware at a significant disadvantage if this proposal were to be adopted.
Third, the rules proposed by the SEC provide that only certain significant shareholders or groups of shareholders would be allowed to nominate directors. Shareholders of the size proposed by the Security and Exchange Commission already have significant direct and indirect participation in management. Such a rule simply would not benefit ordinary investors whose investments do not quality under the rules.
Fourth, I am troubled with the priority system if there are more shareholder nominations than slots available. The current rule as it is stated would allow the shareholders who get to the company first their nominations to be put on the proxy regardless of size. This is counter-productive to the shareholder democracy movement which would require the SEC’s rule to allocate director nominations spots according to size by way of example, a long term institutional investor holding in excess of five percent of a company’s equity would be subject to smaller shareholders who can run faster with their director nominations. This system will create an incentive for routine election contests rather than facilitate smooth an orderly corporate governance.
Lastly, this will only serve as an adverse affect on the valuation of companies because of the additional restrictions imposed by the commission. One major example is that shareholders would be required to certify that they are not holding their stock for the purposes of taking control of the company or gain more than a minority representation of the Board of Directors. By removing the possibility of the opportunity of changing control of the company, the commission would create a chilling effect on valuation of companies, in that in a company’s valuation there may be albeit however small, some percentage for possible takeover bids.
Overall, I would strongly urge the commission to reconsider this rule proposal because of the foregoing reasons.
Sincerely,
Joel McTague
Ms. Elizabeth M. Murphy
Secretary
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549-1090
Security and Exchange Commission
Re: File Number S7-10-09
To Whom It May Concern:
I would like to take this opportunity to comment on the Security and Exchange Commission’s proposed rules regarding shareholder nominations for the Board of Directors. Although I am an attorney this letter is being sent on my own individual behalf and neither on behalf of my firm, nor any particular client.
The SEC’s proposed rule would allow shareholders to nominate directors and require the company to include such nominations on its proxy statements. Although noble in its efforts to the proposal is troubling in several aspects.
First, the boards of directors of corporations in the United States of America have essentially two functions, namely, as an advisor to the executive management of the corporation and as a monitor on behalf of the shareholders. These duties may be in tension at times or namely when the board feels that the executive management of a corporation is not performing on behalf of shareholders, and on the flip side, whereas management has a vested interest in the long term success of the corporation, shareholders do not. The SEC’s proposed rule would favor a huge swing in Board responsibility toward a monitoring activity of a board rather than serving as advise and counsel to management. Such a swing could exacerbate adverse and confrontational roles between Boards and management, where the board of directors becomes more interested in the short terms goals of the shareholders than long term goals of management. This is especially true in that the proposed rules allow shareholders with as little as one percent, (including shareholders aggregating their shares to reach the one percent threshold who are more likely to be pro-holder activists and special interest holders).
Second, the SEC’s role may be overlapping with existing state laws. By way of example, Delaware General Corporate Law, Section 112, provides certain procedures for shareholders to include in the corporation solicitation of proxies their own nominees and slate for directors. Historically, the federal government has left states to determine the internal affairs of the corporation recognizing that the internal affairs of the corporation regulation allow states to compete for various state businesses. The SEC’s entry into the internal governance market may put some states that compete with Delaware at a significant disadvantage if this proposal were to be adopted.
Third, the rules proposed by the SEC provide that only certain significant shareholders or groups of shareholders would be allowed to nominate directors. Shareholders of the size proposed by the Security and Exchange Commission already have significant direct and indirect participation in management. Such a rule simply would not benefit ordinary investors whose investments do not quality under the rules.
Fourth, I am troubled with the priority system if there are more shareholder nominations than slots available. The current rule as it is stated would allow the shareholders who get to the company first their nominations to be put on the proxy regardless of size. This is counter-productive to the shareholder democracy movement which would require the SEC’s rule to allocate director nominations spots according to size by way of example, a long term institutional investor holding in excess of five percent of a company’s equity would be subject to smaller shareholders who can run faster with their director nominations. This system will create an incentive for routine election contests rather than facilitate smooth an orderly corporate governance.
Lastly, this will only serve as an adverse affect on the valuation of companies because of the additional restrictions imposed by the commission. One major example is that shareholders would be required to certify that they are not holding their stock for the purposes of taking control of the company or gain more than a minority representation of the Board of Directors. By removing the possibility of the opportunity of changing control of the company, the commission would create a chilling effect on valuation of companies, in that in a company’s valuation there may be albeit however small, some percentage for possible takeover bids.
Overall, I would strongly urge the commission to reconsider this rule proposal because of the foregoing reasons.
Sincerely,
Joel McTague
2008 Delaware Year in Review
The Harvard Law School Forum on Corporate Governance has a terrific review of developments in Delaware in 2008 which you can find here.
Thursday, May 28, 2009
Time Warner
Time Warner is going to spin off AOL. It will buy Google's 5% stake in AOL in the third quarter and spin them off sometime in the Fourth.
Thursday, May 21, 2009
NetApp buys Data Domain
NetApp, Inc., agreed to buy Data Domain for $25 per share, or approximately $1.5 billion. The belief is that NetApp has the distribution channels and a much deeper consumer base that needs Data Domain's product line.
French Update
In a previous post, I discussed how France was trying to enact legislation that would punish internet pirates by severing internet connections to convicted repeat offenders. It passed. The Socialist Party in France has already challenged the law before the Constitutional Council to determine if the law's ability to enact punishment before the offender had a chance to contest the charges is constitutional in France.
Thursday, April 30, 2009
Pirate Bay in Sweden
Dagens Nyheter's latest poll shows 5.1 percent of Swedish voters support the Pirate Party. The Pirate Party is a group of individuals who ran the file sharing site Pirate Bay and were recently convicted of copyright violations and sentence to one year in prison.
As a footnote, you only need for percent of the vote in order to gain a seat in the European Parliament.
As a footnote, you only need for percent of the vote in order to gain a seat in the European Parliament.
Arrrh! Internet Privacy in France
France is considering legislation to punish internet privacy. The measure would create a new government agency to track pirates. First time offendors would receive an e-mail warning; for second offenses a certified letter, and for the third and subsequent downloads their internet connections severed for as long as one year.
Tuesday, April 28, 2009
Violations of Privacy
California just issued an interesting ruling in Moreno v. Hanford Sentinel over the question of privacy. At issue in this case was whether a psuedo-annonymous letter posted on myspace could be reprinted without the author's consent in a newspaper with her identity revealed. Here, Cynthia Moreno wrote a poem called "An ode to Coalinga" on her Myspace page. Her former high school principal somehow found it and had it published in the Letters to the Editor section, identifying Moreno's full name. The poem, which was less than flattering, caused residents to boycot Moreno's father's business which was forced to shut down. The court here ruled that her photo attached to the original posting prevented the posting from being anonymous. They also allowed the intentional inflection of emotional distress claim to proceed, stating that "a jury should determine whether the alleged conduct was outrageous."
Finally (maybe) . . . Fleeting Expletives
The Supreme Court today released their decision in FCC v. Fox holding that the FCC properly adopted the fleeting expletive rule. Noting that it is a court of final review and not of first impression, the Court remanded to the Second Circuit the question of whether it violated the First Amendment or not.
Friday, March 27, 2009
Conficker
There's a new worm out there set to strike on April 1 called Conficker that's set to strike. Nobody seems to know what it does except that all infected computers will come under the control of a master machine. This is the third variant and expected to be bad. You could get a free online safety scan from Microsoft here.
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