In Cohen v. Viray, No. 08-3860, an objector's appeal from a settlement of a shareholder derivative suit, the court vacated the approval of the settlement where the district court erred by approving the settlement because the settlement agreement impermissibly released and indemnified the company's former executives against all liability arising under section 304 of the Sarbanes-Oxley Act.
As the court wrote: "On appeal, intervenor-appellant argues principally that the district court erred by approving the settlement of the shareholders' derivative litigation brought on behalf of DHB Industries, Inc. against a number of its former officers and directors because the settlement agreement impermissibly releases and indemnifies DHB's former Chief Executive Officer and Chief Financial Officer against all liability arising under § 304 of the Sarbanes-Oxley Act, 15 U.S.C. § 7243.1 We agree."
- Full Text of Cohen v. Viray, No. 08-3860