Vintage Filings Legal Blog

We’ve covered the aerospace previously in this blog and how it related to the Boeing labor dispute.  And it seems like Boeing is in the legal news once again.  In the highly competitive landscape of large-scale defense contracts, one of the keys to continued innovation and technology growth are healthy bidding wars.  However, once a bidding battle has been completed, it should not have to be performed once again due to one company’s dissatisfaction with their loss.  Although it appears to be the what is occurring in the current Pentagon Tanker Competition.

Photo Courtesy of WSJ

The Wall Street Journal reported that the bidding war, for the pentagon’s highly sought after $40 billion dollar tanker contract, has been temporarily called off due to the political entanglements involved in the situation.  This is despite the fact that Northrop Grumman Corp. had already been declared the winner over Boeing this past February.  Boeing’s domestic domination has caused a slowdown in the competitive marketplace and it is clear that the next US Presidential regime will not be forced to make the decision between the two companies.

So does this decision give Boeing a legitimate chance at winning back this contract?  Most likely not.  And there are two main reasons:

1. Boeing currently does not have a plane large enough to fulfill the Air Force’s request.  And with the current Boeing labor dispute (coverage), the company will certainly be meeting with delays for all new projects, especially its new 787.  Conversely, Northrop Grumman has already satisfied the Pentagon’s demand due to the fact that they won the original contract at the end of this past Winter.
2. If the new President is Sen. John McCain, Boeing will find itself on an uphill slope considering that McCain has previously blocked contracts from the aerospace firm that he believed were won ‘too easily’.

Austin Cole from the WSJ says this about the situation,

“Although the decision gives Boeing a chance at a fresh start, the company will face the prospect that one of its key critics, Sen. John McCain, could potentially be the next president when the matter is decided. Five years ago, the Republican senator helped scuttle an original plan to lease a fleet of tankers from Boeing because the contract was not competitively bid. His office played a key role in opening up the competition to Northrop Grumman and its partner, European Aeronautic Defence & Space Co.”

So despite the fact that Boeing has been given a second chance to win this contract, Northrop Grumman still appears to be the most likely company to win this bidding war, and rightfully so.

With the current US financial crisis, and pending government bailout, you may be wondering if anyone is legally pursuing any of the financial institutions that have gone under.  Well on September 24, Wolf Haldenstein Adler Freeman & Herz LLP filed a class action lawsuit on behalf of the investors who purchased the Preferred Series “J” stock of Lehman Brothers.

The Complaint asserts that Lehman’s Prospectus contained both material misstatements and omissions, which Plaintiff and the Class relied upon to their detriment. The representations made in the Company’s Prospectus were materially false and misleading because at the time of the Offering, Lehman was already suffering from several adverse factors that were not revealed and/or adequately addressed in the document; including the failure to set aside adequate allowances to cover the Company’s ever increasing portfolio of underperforming sup-prime related products and to adequately write-down commercial and residential mortgage and real estate assets. These factors were already causing a material adverse affect on Lehman’s business and directly led to Lehman’s September 15, 2008 announcement that it was seeking protection under the Federal Bankruptcy Code in the largest bankruptcy filing in U.S. history.

The Complaint alleges that Defendants could have – and should have – discovered the material misstatements and omissions in the Company’s Prospectus prior to its filing with the SEC and distribution to the investing public. Instead, they failed to do so as a result of a negligent and grossly inadequate due diligence investigation.

It’s the complaint’s perspective that as a result of the dissemination of the false and misleading statements set forth in the complaint, the market price of Lehman Preferred J was artificially inflated during the Class Period. In ignorance of the false and misleading nature of the statements described in the complaint, plaintiff and the other members of the Class relied, to their detriment, on the integrity of the market price of Lehman Preferred J. Had plaintiff and the other members of the Class known the truth, they would not have purchased said securities, or would not have purchased them at the inflated prices that were paid.

We all knew it was simply a matter of time until the shareholder lawsuits began, it is simply a question of whether there are true assets remaining to be taken.  This event reminds me why it is vital to have 100% accurate phraseology and financial reporting data in all of your public filings.  To see how we at Vintage Filings can assist you today, click here.

Ready or not, the SEC is mandating the use of XBRL, extensible Business Reporting Language, for the larger public companies in early 2009 and for all public companies shortly thereafter.  Documents filed into the EDGAR system will be required to be tagged in XBRL.  If you have not decided how to file, or are unsure how this affects your company, you should join us for this free webinar.  Click here to Register.

Even if you have been avidly following the progress of this SEC initiative, this webinar will bring you up to date on the process, taxonomy changes, and key issues you and your company should be reviewing now - before the actual implementation.

A short summary of XBRL is below and supplied by Wikipedia:

XBRL is an open standard which supports information modeling and the expression of semantic meaning commonly required in business reporting. XBRL is XML-based. It uses the XML syntax and related XML technologies such as XML Schema, XLink, XPath, and Namespaces to articulate this semantic meaning. One use of XBRL is to define and exchange financial information, such as a financial statement. The XBRL Specification is developed and published by XBRL International, Inc. (XII).

XBRL is a standards-based way to communicate business and financial information. These communications are defined by metadata set out in taxonomies. Taxonomies capture the definition of individual reporting concepts as well as the relationships between concepts and other semantic meaning.

XBRLS is a simplified form of this standard intended to enable the non-XBRL expert to create both XBRL metadata and XBRL reports in a simple and convenient manner. At the same time, it seeks to improve the usability of XBRL, the interoperability among XBRL-based solutions and to reduce software development costs.