Friday, October 10, 2008

How STT's Directors Defended Themselves from The Jorstad Complaint

Readers who have seen the exhibits below (see The Jorstad Complaint entry) have been astonished at the heavy-handed manner in which the Directors tried to eject Jorstad from the Salary Savings Program, and to sell the other shares he holds in his retirement accounts.

Here's how the Directors instructed their corporate defense attorneys to defend their conduct:

First, they filed a motion to dismiss, saying that Jorstad failed to state a claim upon which relief can be granted, and saying that the Federal Court had no jurisdiction to hear the matter. The motion was signed (under pains of Rule 11 sanctions, for you lawyer types) by John D. Donovan, Jr. (a partner at Ropes & Gray) and by Christopher G. Green (who was willing to sign it to further his partner ambitions).

Backing up their dismissal motion, the Directors signed off on the following legal argument (characterizing their heavy-handed demand that Jorstad sell his shares under threat that the Corporate Actors would pursue criminal charges against his partner, Smith, as being merely an "offer" that Jorstad "divest" his shares).

Draw your own conclusions.

Tuesday, October 7, 2008

The Jorstad Complaint

By popular demand, here is The Jorstad Complaint, obtained from the U.S. District Court for the District of Massachusetts. Click on each thumbnail to see the larger, legible page.

The exhibits are especially interesting, and appear after the horizontal line, for quick reference. They memorialize how State Street executives tried to force Jorstad to sell his shares.

Why were the key executives at State Street so eager to prevent Jorstad and Smith from talking to third parties (e.g., regulators, law enforcement officials, pension plan managers, and institutional shareholders) about the risks to be found on State Street's balance sheet and shoddy internal controls apparatus?

Why were the key executives at State Street so eager to forcibly eject Jorstad from the company's own pension plan (which may well prove to have been harmed by State Street management's actions)?